Oh, how the mighty have fallen. AT&T(NYSE: T) is an iconic company, with a history dating back to the 1800s. Yet its glory days appear to be over, and nothing makes this more clear than its current ranking among the world's largest companies by market cap.
As of this writing, AT&T is now the 93th-largest global company by market cap, with a value of $160 billion. That places it behind its longtime rival Verizon Communications.
Yet, many other companies are nipping at AT&T's market cap heels. Let's have a look at two of the newer, more dynamic ones that I believe could surpass AT&T within the next 12 months.
Image source: Getty Images.
Shopify
Firstup is Canadian e-commerce giant Shopify(NYSE: SHOP).
As of this writing, Shopify sports a market cap of $141 billion, which isonly $19 billion behind AT&T. In some ways, it's deja vu all over again, as Shopify's market cap approached, then exceeded, AT&T's market cap back in 2021. Yet, as pandemic restrictions waned, Shopify's stock tumbled, and its market cap hasn't been above AT&T's since early 2022.
T Market Cap data by YCharts
Now Shopify appears poised to top AT&T again. The company just reported excellent earnings results (for the three months ending on Sept. 30, 2024), highlighted by:
- 26% revenue growth
- 24% gross merchandise value (GMV) growth
- 26% monthly recurring revenue (MRR) growth
- 24% gross profit growth
- 53% growth in free cash flow
Shopify's online e-commerce platform continues to attract clients, both large and small.Thanks to that increasing interest, Shopify's gross merchandise value is expanding, as its vendors sell a larger amount of products on Shopify's platform.
Moreover, Shopify's monthly recurring revenue is increasing as more -- and larger -- enterprise clients sign up for its services. Shopify's subscription revenue remains only 27% of its overall revenue (the rest coming from its merchant solutions segment, which encompasses payment processing fees, referral fees, and advertising).
Yet, while Shopify's subscription revenue is only a quarter of its overall total, it is very profitable. The company's subscription business boasts a gross margin of 82%, compared to 53% for its merchant solutions segment.
Shopify's fundamentals are quite strong, and given its momentum I believe the company's market cap could easily surpass AT&T's market cap within the next 12 months.
Palantir Technologies
Next is Palantir Technologies (NYSE: PLTR), an artificial intelligence (AI) powerhouse that is ushering in cutting-edge solutions for organizations worldwide.
Palantir operates a platform that helps organizations implement large language models into their workflows. While Palantir initially focused on governmental organizations (and in particular with military contractors along with defense and intelligence agencies), the company has branched out. In its most recent quarter (the three months ending on Sept. 30, 2024), commercial revenue accounted for 43% of Palantir's revenue.
Given the immense interest in AI-powered solutions, business is booming. Palantir's revenue soared 30% last quarter, while its overall customer count surged by 39%. In addition, Palantir's CEO, Alex Karp, gave an overwhelmingly positive assessment and forecast, noting: "We absolutely eviscerated 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 firing on all cylinders, while riding a tidal wave of demand for AI-based platforms.
Given its superior product offering and leadership within its niche, it won't be long before Palantir's market cap soars further.And since its market cap (as of this writing) is $138 billion, I predict it will overtake AT&T sometime in 2025.
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Jake Lerch has positions in AT&T. The Motley Fool has positions in and recommends Palantir Technologies and Shopify. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
