Anticipated Increase: Two Stocks Poised to surpass AT&T's Value within a Year
Anticipated Increase: Two Stocks Poised to surpass AT&T's Value within a Year
Look at the fallen giants. AT&T (T 0.51%) used to rule the telecommunications industry, with its history tracing back to the 1800s. However, it seems its golden era is now behind it, evident in its current position among the world's largest companies by market cap.
At the moment, AT&T sits in the 93rd spot, with a market cap of $160 billion. This position puts it below its long-time rival, Verizon Communications.
However, it's not just Verizon that's giving AT&T a run for its money. A few up-and-coming companies are nipping at its heels. Let's take a look at two of these promising contenders that I believe could surpass AT&T within the next 12 months.
Shopify
First up, we have Shopify (SHOP -3.00%), a powerhouse in the Canadian e-commerce sector.
As of now, Shopify boasts a market cap of $141 billion, just $19 billion shy of AT&T. This is somewhat of a deja vu, as Shopify previously surpassed AT&T's market cap back in 2021. But after pandemic restrictions eased, Shopify's stock took a turned for the worse, and it hasn't managed to surpass AT&T's market cap since early 2022.
However, Shopify appears set to reclaim its spot next to AT&T. The company recently reported impressive earnings (for the quarter ending on Sept. 30, 2024), with highlights such as:
- 26% revenue growth
- 24% GMV growth
- 26% MRR growth
- 24% Gross profit growth
- 53% increase in free cash flow
Shopify's online e-commerce platform is continuing to attract both small and large businesses. This increased interest is causing Shopify's GMV to expand, as its vendors sell a larger volume of products on its platform.
Furthermore, Shopify's MRR is also on the rise, as more – and larger – enterprise clients sign up for its services. Currently, Shopify's subscription revenue makes up only 27% of its total revenue, with the remaining coming from its merchant solutions segment.
However, while Shopify's subscription revenue may make up only a quarter of its overall total, it is highly profitable. Its subscription business boasts a gross margin of 82%, compared to 53% for its merchant solutions segment.
Shopify's financials are solid, and I believe its market cap will easily surpass AT&T's within the next 12 months.
Palantir Technologies
Next up, we have Palantir Technologies (PLTR 3.55%), a trailblazer in artificial intelligence (AI).
Palantir operates a platform that enables organizations to incorporate large language models into their workflows. While Palantir initially focused on governmental organizations, it has since expanded its reach. In its last quarter (ending on Sept. 30, 2024), commercial revenue accounted for 43% of Palantir's overall revenue.
With the intense interest in AI-powered solutions, business is booming for Palantir. The company's revenue increased by 30% last quarter, while its customer base surged by 39%. Moreover, Palantir's CEO, Alex Karp, gave an optimistic outlook, saying, "We absolutely crushed this quarter, driven by unrelenting AI demand that won't slow down. This is a U.S.-driven AI revolution that has taken full hold."
Palantir is on a roll, riding a wave of demand for AI-based platforms.
Given its superior product offerings and strong leadership in the niche, it won't be long before Palantir's market cap soars even further. I predict it will surpass AT&T by 2025, given its current market cap of $138 billion.
In the current market scenario, Shopify, with its impressive quarterly earnings and expanding e-commerce platform, is poised to surpass AT&T's market cap of $160 billion within the next 12 months. Shopify's solid financials, high-profit subscription business, and increasing interest from both small and large businesses make it a promising contender for growth.
Similarly, Palantir Technologies, a trailblazer in artificial intelligence, is experiencing significant growth due to the intense interest in AI-powered solutions. With commercial revenue accounting for 43% of its overall revenue and a 30% increase in revenue last quarter, Palantir's market cap of $138 billion could surpass AT&T's within the next few years.