Can Tesla beat Google, Amazon and Nvidia?

Can Tesla beat Google, Amazon and Nvidia?

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  • Tesla faces a steeper climb to $2 trillion than several other stocks.
  • There is a potential scenario, though, where Tesla vaults past Alphabet, Amazon, and Nvidia.
  • Other dark horses also have a shot at upstaging Tesla.

It’s possible, but not probable — for now.

Only two stocks that trade on U.S. exchanges currently boast market caps of more than $2 trillion. Apple is in a league of its own with a market cap of over $3 trillion. Microsoft’s market cap stands near $2.5 trillion.

Google parent Alphabet (GOOG 0.18%) (GOOGL 0.24%), Amazon (AMZN 0.76%), and Nvidia (NVDA -0.13%) rank as the closest contenders to join the $2 trillion club. But could Tesla (TSLA 0.09%) beat them to the punch?

Tale of the trajectories

Tesla stock has more than doubled so far in 2023. The electric vehicle (EV) maker’s market cap now tops $825 billion. At the rate Telsa has been going, it could hit the $2 trillion mark sometime next year.

Of course, there’s certainly no guarantee that Tesla stock will continue its current trajectory. Indeed, the odds are probably against it. There’s also the small detail to consider that the stocks with market caps already above $1 trillion have enjoyed strong momentum of their own.

Alphabet’s shares have jumped 50% year to date. The stock only needs to rise 17% to join the $2 trillion club. That’s a much more attainable goal than the increase that Tesla requires.

Amazon stock is up close to 56% this year. With a market cap of over $1.3 trillion, the e-commerce and cloud giant would nearly have to churn out another 50% to reach $2 trillion.

Then there’s Nvidia. The chip stock has a longer hill to climb than Alphabet or Amazon with its market cap of under $1.2 trillion. However, Nvidia’s share price has more than tripled in 2023. Such a pace could put the stock on track for a $2 trillion valuation before the end of the year. It’s probably not realistic to expect that Nvidia’s fantastic head of steam will continue at full strength, though.

What would it take?

Objectively, the likelihood that Tesla beats Alphabet, Amazon, and Nvidia in joining the $2 trillion club appears to be small. But what would it take?

Coming up with the ideal scenario that would enable Tesla to leapfrog Alphabet, Amazon, and Nvidia isn’t as easy as it might seem. A strengthening economy would help all of the stocks. Conversely, an economic downturn would probably hurt Tesla as much as it would the others.

Perhaps Nvidia could be taken out of contention because of concerns about its valuation. However, Tesla stock trades at a forward earnings multiple that’s even higher than Nvidia’s.

Most factors that would help or harm Alphabet, Amazon, and Nvidia would also impact Tesla in a similar way. So is there a scenario where Tesla could reach a market cap of $2 trillion before the others? Yes, but it’s admittedly a stretch.

Suppose Tesla has some overwhelmingly positive news that in no way affects Alphabet, Amazon, and Nvidia. Perhaps major governments around the world announce policies that lead to a massive and immediate surge in EV purchases and benefit Tesla the most. Maybe, just maybe, in this hypothetical situation, Tesla stock could skyrocket so much faster than the others that its market cap reaches $2 trillion first.

Dark horses

However, there’s one other wrinkle to keep in mind. Two others are nearly as close to $2 trillion as Tesla: Meta Platforms and Berkshire Hathaway.

We could conduct similar exercises for Meta and Berkshire to come up with ways for either stock to vault past Tesla to join the $2 trillion club. For that matter, we could do so for any mega-cap stock.

If it was a horse race to reach $2 trillion, Meta and Berkshire would definitely be dark horses. So would Tesla. For now, the smart money would instead be on Alphabet to achieve the milestone.

But the smartest investors won’t care about the $2 trillion club at all. They’ll focus on buying the stocks that have the greatest growth prospects. Tesla arguably already belongs in that club.

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