Six publicly traded U.S. companies have market values of at least $1 trillion. From largest to smallest, that elite group includes Apple, Microsoft, Nvidia, Alphabet, Amazon, and Meta Platforms. But more companies will join the list as the global economy expands in the coming years.
For instance, Shopify (NYSE: SHOP) is currently worth $101 billion, but its market value could reach $1 trillion before 2040. If that happens, Shopify stock will return 890% over the next 15 years, which equates to 16.5% annually.
Here's what investors should know about this brilliant growth stock.
Shopify is a leader in e-commerce and omnichannel software
Shopify is the market leader in e-commerce and omnichannel commerce software. What sets the company apart is its unique ability to simplify retail. Its platform lets merchants run their businesses across physical and digital channels from a single dashboard. It integrates with online marketplaces like Amazon and social media platforms like Meta's Facebook and Instagram, and it helps merchants build direct-to-consumer websites.
Shopify also offers adjacent solutions for marketing, payments, and logistics and addresses back-office functions like tax compliance, bill payments, and fraud protection. Additionally, the company caters to larger brands with Shopify Plus and Commerce Components. The former is an enterprise-grade platform with more sophisticated features than Shopify's standard software, and the latter lets enterprises build commerce platforms from scratch, using individual parts of Shopify's technology stack.
Importantly, Shopify Plus and Commerce Components include solutions for business-to-business (B2B) e-commerce, also called wholesale. According to Grand View Research, this market is three times bigger and growing two times faster than retail e-commerce. In the second quarter, Forrester Research named Shopify a leader in B2B commerce tools, citing rapid product development and artificial intelligence features as key strengths.
Collectively, the wholesale and retail e-commerce markets are expected to grow at 18.9% annually through 2030. But Shopify's sales growth should outpace the industry average. Its ability to simplify commerce is a compelling value proposition for businesses of all sizes, and the company has proven itself adept at deepening its relationship with merchants over time.
Shopify looked strong in the second quarter
Shopify reported strong financial results in the second quarter. Gross merchandise volume (GMV) jumped 22% to $67 billion, and revenue increased 21% to $2 billion. But revenue increased 25%, excluding the impact of the logistics business, which Shopify sold in the second quarter last year. Meanwhile, non-GAAP (generally accepted accounting principles) net income increased 85% to $0.26 per diluted share.
Management highlighted strong momentum in wholesale, physical retail, and international commerce, three growth vectors where the company has made a concerted effort to gain share. Specifically, wholesale GMV more than doubled, offline GMV increased by 27%, and the number of international merchants on the platform increased by 30% during the second quarter.
Looking ahead, Shopify still has plenty of room to grow its business. The company has captured less than 2% of its serviceable addressable market, which it values at $404 billion. Moreover, management believes that opportunity will reach $849 billion as the company expands into new geographies.
How Shopify can become a trillion-dollar company before 2040
Wall Street forecasts Shopify's revenue will grow at 21% annually through 2027. That is plausible, given that global e-commerce sales are projected to increase at 18.9% annually through 2030. Assuming revenue growth decelerates gradually, Shopify's top line could compound as quickly as 16% annually over the next 15 years.
In that scenario, the company's trailing-12-month revenue would reach $71.9 billion after the quarter ending in June 2039. At that point, if shares trade at 14 times sales, a discount to the three-year average of 15.4 times sales, Shopify would be worth $1 trillion. That implies annual shareholder returns of 16.5% over the next 15 years.
However, the stock would still compound at 11.2% annually, even if Shopify was only worth $500 billion by 2039. Returns of 11%-plus would almost certainly beat the benchmark S&P 500. In other words, even if my $1 trillion prediction is 50% too high, Shopify shareholders could still see market-beating returns over the next 15 years.
Should you invest $1,000 in Shopify right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Trevor Jennewine has positions in Amazon, Nvidia, and Shopify. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Shopify. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
1 Brilliant Growth Stock to Buy Now. It Could Join Apple, Nvidia, and Amazon as a $1 Trillion Company by 2040. was originally published by The Motley Fool