Meet the Unstoppable Artificial Intelligence (AI) Stock That Could Join Apple, Nvidia, and Microsoft in the $3 Trillion Club by 2028

At the start of 2022, Apple (NASDAQ: AAPL) became the first company to reach a $3 trillion market cap.

It was a valuation that was unfathomable just a decade ago when the largest company in the world (also Apple) was worth $600 billion. And people were saying it was overvalued then. Today, however, three companies boast valuations of more than $3 trillion -- Apple, Nvidia (NASDAQ: NVDA), and Microsoft (NASDAQ: MSFT) -- and we should see several more join the fray over the next few years.

One factor uniting the three members of the $3 trillion club is they're all tied in one way or another to the growth in artificial intelligence. The next members of the group will likely benefit from growing spending and reliance on AI in business and everyday life. However, one company, in particular, stands to benefit greatly from its massive investments in AI, and that could lead its stock to double in value over the next few years, leading it to a $3 trillion market cap.

I see Meta Platforms (META -0.79%) joining the $3 trillion club by 2028. Here's how AI will help it get there.

How AI can truly supercharge Meta's business

Meta's business has long relied on artificial intelligence, aka "the algorithm." The algorithm is responsible for determining what content to put in front of a user and when to do it, whether that's a photo from a friend, a video from a professional content producer, or an ad from a small business. In fact, Meta used multiple machine learning systems to determine the best content recommendations for each type of content across its various apps and surfaces.

However, the success of large language models led it to change course. It's now developing a generalized content recommendation system across all surfaces inspired by the power of large-scale large language models. And it works better than its old algorithms. Another upside of this development is a more efficient software engineering team, which can work on a unified model instead of a bunch of individual recommendation engines.

With generative AI, Meta brings to the table the ability to help marketers craft hundreds of different iterations of their ads. It has the scale to test each of those ads across its platform and optimize the targeting and creative to deliver the best possible results. CEO Mark Zuckerberg sees a day when an advertiser will be able to simply tell Meta its business objective and budget, and it'll take care of the rest. That would drive significant sales growth as it would open the doors for more marketers with smaller creative teams to advertise more on Facebook and Instagram.

Meta also introduced the ability for businesses to create their own AI chat agents in WhatsApp and Messenger last year. These represent an opportunity to finally monetize its messaging apps by giving businesses a way to interact with potential customers at scale.

Finally, generative AI has the potential to lead to more user-generated content. In fact, Meta introduced a new feature in Meta AI, its AI chatbot built into its apps, which lets users take AI-generated images and share them to their feed or stories, or post them as their Facebook profile picture. It's not hiding the fact that these are AI-generated, either, encouraging users who see the images to make their own images based on the ones they like.

Investors can draw a clear picture of how artificial intelligence can increase engagement across Meta's apps, improve its monetization, and ultimately lead to more efficient engineers. All of that leads to tangible financial outcomes like greater revenue and improved profit margins. That's a lot more than many big companies riding the AI wave can say.

The path to $3 trillion

Meta has a market cap of just under $1.5 trillion as of this writing. To reach $3 trillion by 2028, the stock will have to produce compound annual returns of about 20%. That seems within reach for the tech stock, especially if AI helps fuel faster earnings growth.

Analysts are currently modeling a 15% increase in revenue next year. If Meta can continue to grow revenue at that pace for the following three years, it'll be on a strong path toward a $3 trillion valuation.

In the near term, Meta's massive capital expenditures to support its AI development will weigh on its operating margin as more and more of its spending today shows up as depreciation expenses down the line. Over time, however, the impact of that spending will dissipate as Meta continues to grow. What's more, since depreciation is a non-cash expense, it means free cash flow will remain strong, giving management the opportunity to buy back shares. Ultimately, that should lead to strong earnings-per-share growth and justify a high earnings multiple.

Meta shares currently trade for just 22.5 times analysts' 2025 earnings estimate. By comparison, Apple, Microsoft, and Nvidia trade for 31.6, 32.5, and 32.6 times forward earnings estimates. If Meta's earnings multiple expands slightly toward the mid-20s as it shows strong financial results and continues to buy back shares, it should produce returns strong enough to push it past the $3 trillion mark.

Of course, there's no way to know for certain that Meta can reach that milestone. However, based on everything we know today, the company is poised to grow thanks to its advancements in AI, and the market is offering a great price on the stock.