Two AI Stocks Set to Hit $1 Trillion Valuation

Published Date : 04/11/2025 

Artificial intelligence (AI) continues to be a lucrative investment opportunity. Advanced Micro Devices (AMD) and Oracle are two leading tech stocks that could soon join the elite ranks of $1 trillion companies. Here's why. 

Artificial intelligence (AI) continues to be a promising investment sector, with major tech companies investing heavily in data centers, supercomputers, and advanced chips to power AI services. While some leading AI companies already have market caps in the trillions, two tech stocks currently valued much lower could soon join the elite club of $1 trillion companies. These stocks are Advanced Micro Devices (AMD) and Oracle.

1. Advanced Micro Devices (AMD)

Investors have been focusing on Nvidia, the dominant leader in graphics processing units (GPUs) essential for training AI workloads. However, AMD's stock has surged 118% this year, reaching a market cap of $428 billion. The company has made significant strides in improving the cost-performance ratio of its GPUs, which has been validated by recent deals.

AMD was chosen to provide advanced computing solutions for two supercomputers being built for the U.S. Department of Energy. This is a significant win for AMD, as these supercomputers will serve as 'AI factories' for major sectors like energy, healthcare, and national security. AMD's GPU capabilities are also being validated by their deployment by seven of the top 10 AI model makers. The company's data center revenue grew 14% year over year in Q2, and this is expected to accelerate next year with the launch of its MI400 series of GPUs, with OpenAI already on board to use these chips.

Despite the recent surge, AMD's stock doesn't look overpriced. It trades at a forward (1-year) price-to-earnings (P/E) multiple of 42, supported by its growth prospects. Analysts expect the company's earnings to grow at an annualized rate of nearly 40% over the next several years. If the stock continues to trade around the same P/E, it could more than double over the next five years, potentially reaching a $1 trillion market cap.

2. Oracle

Oracle, with a market value of about $785 billion, has the easiest path to potentially reaching $1 trillion in market cap and could even aim for $2 trillion. The stock has climbed 65% year to date, driven by accelerating growth in its cloud infrastructure business.

Oracle has been a leader in database management for many years and is now stepping up its game in AI cloud offerings. Its cloud infrastructure segment posted an impressive 55% year-over-year increase in revenue in the fiscal first quarter, following notable deals with OpenAI, xAI, AMD, and other tech leaders. Oracle's remaining performance obligations (RPO) are $455 billion, which is significant compared to its trailing-12-month revenue of $59 billion. Even if Oracle fulfills half of that contracted revenue, it would significantly benefit the stock. The expanding RPO reflects Oracle's leadership in offering world-class database services and increasing data center capacity worldwide. Oracle has already signed additional contracts that will push its RPO above $500 billion in the current quarter. Management's guidance calls for its cloud infrastructure business to grow 77% for the full year.

The stock appears reasonably valued at a forward (1-year) P/E of 34, especially considering analysts have recently raised their long-term growth forecast. The current estimate has Oracle's earnings growing at an annualized rate of 23% in the coming years, which could send the stock well past $1 trillion on its way to a $2 trillion market cap within the next five years.

Investing in these two AI stocks could offer significant returns, given their strong growth potential and strategic positioning in the AI market. Whether you're a seasoned investor or just starting out, these companies are worth considering for your portfolio. 

Frequently Asked Questions (FAQS): 

Q: What is the current market cap of Advanced Micro Devices (AMD)?

A: As of the latest data, AMD's market cap is around $428 billion.

Q: Why is AMD considered a strong candidate to reach a $1 trillion market cap?

A: AMD has made significant strides in improving the cost-performance ratio of its GPUs, secured major deals, and is expected to see strong revenue growth in the coming years.

Q: What is Oracle's current market cap and why is it a strong candidate to reach $1 trillion?

A: Oracle's current market cap is around $785 billion. It has a strong cloud infrastructure business and a large remaining performance obligation, which indicates significant future revenue potential.

Q: What is the forward P/E ratio of AMD and Oracle?

A: AMD trades at a forward P/E multiple of 42, while Oracle trades at a forward P/E of 34.

Q: What is the projected annualized earnings growth rate for AMD and Oracle?

A: Analysts expect AMD's earnings to grow at an annualized rate of nearly 40%, and Oracle's earnings to grow at an annualized rate of 23% over the next several years. 

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