For example, if Amazon’s earnings grow 35% over the next four quarters and the stock trades at 54 times earnings (down from its peak of 62 times earnings last year), its share price it would increase by 52% and its market value would reach 3.5 trillion dollars. . However, Amazon is a worthwhile long-term investment, even if the company doesn’t surpass Nvidia’s current market value by the end of 2025.

Alphabet reported encouraging financial results in the third quarter, beating estimates at the top and bottom. Revenue rose 15% to $88 billion, with particularly strong sales growth in Google Cloud and modest growth in Google Services (advertising). Meanwhile, GAAP net income rose 37% to $2.12 per diluted share. Analysts had expected earnings to grow 19%.

Alphabet may continue to beat estimates as demand for AI cloud services rises. Google Cloud gained 2 percentage points of market share last year, while Microsoft lost 3 percentage points. And Google’s investments in AI product development may keep this trend moving. Importantly, Google is the only company besides Amazon to deploy custom AI chips at scale, according to New Street Research.

More broadly, Google has a strong position in several AI product categories. Forrester Research recently recognized its leadership in AI infrastructure solutions, machine learning platforms and large fundamental language models. In a report, analyst Mike Gualtieri called Google the best-positioned hyperscaler for AI and said the company offers enough differentiation to win customers from other public clouds.

Wall Street estimates Alphabet’s earnings will rise 14% over the next four quarters, making its current valuation of 26 times earnings look fair. But generative AI spending could lead to above-consensus earnings, and the valuation multiple could widen once investors get more clarity on the outcome of the Google Search antitrust case later this year. this year

Collectively, these tailwinds could help Alphabet surpass Nvidia’s current market value by the end of 2025. For example, if earnings rise 25% over the next four quarters and the stock trades at 30 times earnings when by the end of that period, its stock price would advance 46.% and the company would be worth $3.5 trillion. However, Alphabet is a worthwhile long-term investment, even if my prediction doesn’t pan out.

Ever feel like you’ve missed the boat on buying the hottest stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock. recommendation for companies that believe they are about to exit. If you’re worried you’ve already missed your investment opportunity, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled in 2009, you would have $352,417!*

• Apple: if you invested $1,000 when we doubled in 2008, you would have $44,855!*

• Netflix: if you invested $1,000 when we doubled in 2004, you would have $451,759!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another opportunity like this anytime soon.

See 3 “Double Down” actions »

* Stock Advisor returns from January 6, 2025

Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Trevor Jennewine has positions in Amazon and Nvidia. The Motley Fool has positions and recommends Alphabet, Amazon and Nvidia. The Motley Fool has one disclosure policy.

Prediction: 2 AI stocks will be worth more than Nvidia by year-end 2025 was originally published by The Motley Fool