In the aftermath of Nvidia’s (NASDAQ:NVDA) historic trillion-dollar run, investors are scrambling to find the next potential trillion-dollar stocks to join the club. Quite a few contenders are nearing the mark regarding valuations, but the market cap isn’t everything. Investors looking for the next trillion-dollar stocks might have to look for more than that. I suggest checking analysts’ ratings — specifically, stocks nearing the trillion-dollar mark with Wall Street’s seal of approval.
So, today, let’s look at stocks meeting those criteria. I screened the market for the following:
- Market capitalization near $1 trillion,
- Up more than 40% YTD,
- A strong buy rating from analysts.
Then, I took the top three based on market cap and arranged the results from highest to lowest. Let’s start with:
Taiwan Semiconductor (TSM)
Investors have started to notice Taiwan Semiconductor (NYSE:TSM) during the initial AI breakout. The company is the largest semiconductor foundry in the world, with dedicated fabrication plants in Germany, the U.S., Japan and China.
Taiwan Semiconductor, or TSMC for short, boasts an excellent client list that includes small companies and tech heavy-hitters like Qualcomm, Broadcom, ARM, Intel, Apple and Nvidia. The increased demand from these clients as they integrate AI into their expansive product lines will increase TSMC’s revenue.
Furthermore, here’s more proof that the AI boom is not over: experts anticipate high demands and tight supplies for 2024 and 2025. As the top chip provider, TSM is expected to benefit greatly from this prediction.
TSM stock has had an impressive run since the start of the year, recording an 83.82% return YTD. Its market cap is $974.2 billion, ranking it as one of the closest stocks to a trillion-dollar valuation.
Its financials show a massive sales boost from the pandemic’s start in 2020 to its latest report. However, the company’s FY’23 report indicated a revenue and net income dip. Still, analysts see plenty of reasons to buy TSM stock and rate it a strong buy.
Eli Lilly and Company (LLY)
Eli Lilly and Company (NYSE:LLY) is a multinational pharmaceutical company known for innovative drug development covering many common and rare medical conditions. Its most popular drugs are the following, based on their sales numbers:
- Trulicity: diabetes medication to lower blood sugar levels
- Mounjaro: revolutionary weight-loss drug
- Verzenio: used to treat breast cancer
- Taltz: treats autoimmune dysfunctions
- Jardiance: Similar to Trulicity
Eli Lilly plans to expand its portfolio by acquiring Morphic, another biotech company focusing on developing treatments for serious chronic conditions. Morphic’s lead development program aims to develop an oral treatment for inflammatory bowel syndrome.
The company is valued at $877.8 billion, a few short steps away from joining the trillion-dollar stocks club. If its upward trend continues, then we may see it happen soon. As for now, LLY stock is up 55% YTD.
Meanwhile, LLY’s FY23 report showcased an impressive 20% YOY increase in revenue. However, increased pipeline developments and acquisitions drove the bottom line 16% lower. Nonetheless, analysts see plenty of room for growth for the company, judging from their strong buy rating.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) is another tech company at the forefront of the AI revolution. It develops a wide range of semiconductor and infrastructure software products, including solutions for wireless communications, enterprise storage and industrial applications.
Last month, the company announced its flagship private cloud platform, VMware Cloud Foundation. The platform aims to deliver combined features of both private and public clouds and is anticipated to perform AI and machine-learning workloads at an enterprise level.
Paul Turner, Vice President of Products, says the VMware Cloud foundation will offer “unmatched operational simplicity and proven total cost of ownership value.”
The company also had some good news for investors in its FY’23 report. “In fiscal year 2023, we achieved record adjusted EBITDA margin of 65%, generating $17.6 billion in free cash flow or 49% of revenue, demonstrating our stable and diversified business model,” said CFO Kirsten Spears.
On top of that, revenue increased by 8% YOY, while net income increased by $1.85 billion, reaching $18.38 billion for the full year.
AVGO has a market cap of $820 billion, and the stock is up 60.85% YTD. As befitting of one of the best stocks nearing the trillion-dollar mark, AVGO stock has a strong buy rating.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.