Prediction: This Stock Will Be Worth More Than Nvidia, Microsoft, and Apple 5 Years From Now

Two companies have sat at or near the top of the list of the world's most valuable companies for the better part of a decade: Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT). The longtime tech giants were recently joined at the top of the list by Nvidia (NASDAQ: NVDA), which has skyrocketed in value as demand for its market-leading GPUs soared.

All three of these companies have, at one time or another, surpassed a market valuation of $3 trillion, although Apple is the only one hanging onto that milestone at the moment. Meanwhile, there's a clear gap between the three giants in the market and the next group of mega-cap stocks.

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But there's one company that could join and even surpass Nvidia, Microsoft, and Apple's valuation over the next five years, and its stock looks like an incredible value right now.

Image source: Getty Images.

A dominant force across multiple industries

The appeal of a company like Apple, Microsoft, or Nvidia, which have come to completely dominate certain markets like smartphones, PC operating systems and enterprise productivity software, and GPUs is clear. But a company that dominates multiple industries can be even more appealing. Especially if those industries have strong growth potential.

That's why Amazon (NASDAQ: AMZN) looks like such a great opportunity for investors right now.

Amazon holds a dominant position in e-commerce. It's the market leader in cloud computing. It's one of the largest digital advertising channels, and it's growing quickly. And it has several additional growth opportunities ahead.

Amazon got to this point by being willing to sacrifice in the short-term for long-term potential gain. And that gain started to come to fruition in the last few years. That's evidenced by its massive free cash flow growth and expanding operating margin. Amazon set new records for both in 2024, generating $32.9 billion in free cash flow with a 10.75% operating margin.

Importantly, Amazon has seen improvements in profitability across all of its businesses. North American retail saw its operating margin expand to 6.4% last year from 4.2% last year. Its international segment turned positive last year as well, generating operating margin of 2.7% versus -2% in 2023. And Amazon Web Services generated a massive operating margin of 37% in 2024 versus 27% in 2023.

That margin expansion should continue in 2025. Amazon spent the last two years revamping its logistics network in the United States to reduce costs and improve delivery times. It's gone from a heavy investment cycle and it's now capitalizing on that investment with improved profitability. Amazon's high-margin advertising business is also wrapped up in its retail business. That's poised to grow quickly as it expands advertising inventory with more video ads in Prime Video and its marketplace.

Meanwhile, Amazon has committed to spending heavily on Amazon Web Services in 2025 to meet the growing demand for AI services. But its spending ahead of forecasted demand. Management said it remained capacity constrained in 2024, so it expects significant revenue growth in 2025 as it builds out more data centers for AWS.

Despite the massive spending on AWS, the improved profitability should produce continued growth in free cash flow over time.

Emerging opportunities abound

Amazon has never been afraid to expand into new opportunities when it sees them. And there are two big opportunities where the company can leverage its massive infrastructure to provide services few others can compete with.

The first big opportunity is in the continued growth of artificial intelligence (AI). Amazon can benefit not just from a raw compute perspective, but from additional services that can help enterprises make the most of large language models. It introduced Amazon Bedrock to help customers leverage the foundation models of others, customized with a customers' own data, to build new AI applications.

Its also building its own AI applications for consumers, and providing frameworks for businesses to easily develop their own applications or internal AI agents. This likely is still the early innings of AI development, and Amazon is positioned to be one of the big winners from continued growth.

The other opportunity is in logistics. Amazon has built an extensive network of fulfillment centers and warehouses throughout the country. Amazon shipped more packages than any other carrier in the United States in 2022. As mentioned it recently revamped its system to maximize the efficiency of the massive network.

Amazon offers limited services for merchants outside of its marketplace, but it could launch its own logistics service for third parties in the future, and its a big opportunity. Considering Amazon could mostly leverage existing infrastructure and systems, the incremental profits from logistics services could be another major growth lever for the business.

Growing faster and overtaking the market leaders

With multiple leading positions in several fast-growing markets and new opportunities ahead, it may be only a matter of time before Amazon overtakes Nvidia, Microsoft, and Apple to become one of the most valuable companies in the world.

The stock currently looks relatively undervalued. Its forward PE sits around 29.5 as of this writing. While that's higher than the three biggest companies in the market, it's relatively low for Amazon. That's especially true if you compare Amazon to other retailers right now or its historic PE ratio.

Moreover, Amazon is charting a path to grow its free cash flow significantly over the next few years as AWS scales and its retail operations become more profitable. By 2030, the company could easily surpass $100 billion in annual free cash flow. (It's worth noting, analysts previously thought Amazon would reach that level by next year, but Amazon's plans to spend $100 billion on capex this year and greater economic uncertainty have reduced those estimates.) With a 2% free cash flow yield, that would put its valuation at $5 trillion, a 2.5% yield would put it at $4 trillion.

Even if Amazon doesn't overtake Nvidia, Microsoft, and Apple by then, that still presents an appealing opportunity with a current market valuation less than $2 trillion.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Levy has positions in Amazon, Apple, and Microsoft. The Motley Fool has positions in and recommends Amazon, Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.