This S&P 500 stock just hit $1 trillion! Which one will be next?

This often-overlooked semiconductor business just surpassed a $1trn market capitalisation as demand for its AI chips explodes to record highs!

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2024’s been a terrific year for S&P 500 index investors, who’ve reaped a 29.8% total return since January. That’s almost triple its long-term average of 10%. And yet this performance pales in comparison to the success of Broadcom (NASDAQ:AVGO).

Large-cap stocks don’t often get much attention from investors. But with the surge of artificial intelligence (AI) spending, many of these businesses have reaped tremendous gains over the last two years. And the semiconductor manufacturer has been no exception, with the stock surging by almost 120%, pushing its market-cap over the $1trn threshold!

AI-fuelled explosion

The story at Broadcom’s very similar to Nvidia. With data centres and other tech-driven businesses seeking to upgrade their IT infrastructure for large language AI models, demand for Broadcom’s AI chips has gone through the roof.

Should you invest £1,000 in NatWest Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if NatWest Group made the list?

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Its latest quarterly results revealed $3.7bn of revenue from these products – a 150% year-on-year increase. That pushed overall sales up by 51% for the quarter. And given AI spending’s expected to continue rising next year, Broadcom’s momentum might only be getting started, especially since management sees a $60bn-$90bn market opportunity for its AI chips by 2027.

With an explosive outlook and growth accelerating drastically, it’s not surprising to see the semiconductor stock skyrocketing. Of course, Broadcom isn’t the only business chasing this opportunity. The threat of competition’s rising as more companies are seeking to develop their own AI chips to cash in on the gold rush. And given semiconductors are a notoriously cyclical space, overproduction could eventually result in slow-moving inventory and a sharp reduction in revenue expansion.

Nevertheless, it’s a growth story worth watching closely. After all, Nvidia managed to reach a market-cap of over $3trn. If Broadcom can do the same, the returns seen so far may only be the tip of the iceberg.

Who’s next?

Right now, there are nine US businesses sitting in the four-comma club. So who’s going to be number 10? Looking just at market-caps, Berkshire Hathaway looks like it’s the closest at $982bn. In fact, Warren Buffett’s investment firm briefly surpassed $1trn earlier this year before cooling slightly.

As for a runner-up, Walmart’s the next closest with a market-cap of $762bn, with Eli Lilly on its heels at $701bn. It’s not just the chip makers leveraging AI to generate growth. Both the retail giant and pharmaceutical titan are incorporating the technology to boost operational performance, from AI personal shopping assistants to clinical data analysis.

Are these businesses guaranteed to hit a trillion? No, there are never any guarantees in the world of investing, especially when competition’s fierce. Nevertheless, both enterprises have impressive track records of defying expectations, making them worth a closer look, in my opinion.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in NatWest Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if NatWest Group made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Nvidia and Walmart. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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