Just a few years ago, setting a course for a U.S.-based company to break through the elusive $1 trillion market cap seemed like a Herculean task. Then came the momentous leap by Apple in early August 2018, a feat that was closely shadowed by market corrections driven by U.S.-China trade tensions and Federal Reserve policy uncertainties. The subsequent COVID-19 turmoil of spring 2020 further jolted the landscape. However, amidst these convulsions, Apple clawed back to the trillion-dollar pedestal and surged past the $2 trillion stratosphere. Fast forward to early January 2022, and Apple was on the brink of touching a $3 trillion market cap, while Microsoft almost breached $2.5 trillion, Alphabet was inching towards $2 trillion, and both Amazon and Tesla had secured spots above the $1 trillion echelon. Meta Platforms too was within striking distance of the grand $1 trillion mark.

The tech domain, known for its undulating fortunes, faced a tumultuous 2022. Following the tempest, only Apple, Microsoft, and Alphabet remained perched atop the $1 trillion summit. Volatility is characteristic of companies with diverse business units and a global footprint. Instead of attempting to time the market, the prudent approach is to identify companies poised to not only attain $1 trillion by the end of 2024 but also fortify their valuations in the long run.

Post the stellar earnings spectacle by Meta, six companies currently command a market cap north of $1 trillion – Microsoft, Apple, Amazon, Alphabet, Nvidia, and Meta.

So, why might Tesla and Berkshire Hathaway be the horses to bet on before they embark on a triumphant return to trillion-dollar valuations?

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Tesla’s Trials and Triumph

A rollercoaster ride defined Tesla’s stock performance in 2023. Despite doubling in value, it is still languishing at nearly 50% below its all-time zenith – a testimony to the underlying reasons. While the achievement of its 2023 production target was commendable, Tesla’s growth has slackened, particularly in terms of earnings and revenue. Shrinking margins, occasioned by price slashes as a response to tepid demand, have exacerbated the situation.

If one were to scrutinize the trailing-12-month figures, a mere 11.5% lift in sales, an 8.5% retreat in net income, and a nosedive in operating margin by over 25% to a paltry 11.2% would emerge.

The unease voiced by CEO Elon Musk, expressing reluctance to propel Tesla as a frontrunner in AI and robotics sans augmented sway over the company, has only added fuel to the conflagration. Yet, even amid this volatility, Tesla reigns supreme in the electric vehicle (EV) arena. While competition is mounting, not a single entity comes close to matching Tesla’s prowess in balancing profitability, global exposure, growth prospects, and the roadmap toward introducing budget-friendly EV models for the masses.

A scant six years ago, Tesla grappled with inconsistent profits and hadn’t stabilized Model 3 production to generate consistent cash flows. Emotional overtones reverberated louder back then. However, Tesla has transitioned to a more assured position today. Elon Musk remains Tesla’s prominent voice, but he no longer acts unilaterally or wields absolute control.

Tesla’s sturdy financial footing and cash flows render it capable of withstanding self-inflicted setbacks or industry-wide slowdowns. Moreover, Tesla is poised to potentially seize market slices during a deceleration, disallowing erosion of its market share. Legacy players with burgeoning EV segments may be more inclined to curtail EV investments rather than jeopardize existing cash cows. On the whole, Tesla offers an ideal blend of risk and reward amidst its inherent volatility.

The Hidden Fortunes of Berkshire Hathaway

Lurking near an all-time pinnacle and sporting a market cap slightly exceeding $800 billion, Berkshire Hathaway, helmed by Warren Buffett, stands as the runner-up in the race to $1 trillion, trailing only Meta. The company posits numerous avenues to ascend the summit. The worth of its public equity portfolio alone tips the scales at $368.8 billion, leaving the remainder of the business valued at approximately $438.3 billion.

Besides its portfolios, Berkshire holds sway over hordes of companies and holds stakes in sundry private enterprises, rendering the overall company’s magnitude a daunting cipher. Reverence toward the company has surged, with potential undervaluation manifest in its significant contributors alone.

Berkshire’s insurance arms alone house a trove of value, furnished by their stable earnings and predictability. The property and casualty insurance businesses straddle the investment and underwriting sectors, encompassing stalwarts such as GEICO, Berkshire Hathaway Primary Group, and Berkshire Hathaway Reinsurance Group.

Berkshire’s adept underwriting has yielded a substantial float, swelling to around $164 billion by the close of 2022. Delineating the insurance business’s value solely by its float, albeit ultra-conservative, would imbue this asset with a valuation representing almost a fifth of the company’s overall market cap.

The BNSF railroad, under Berkshire’s wing, raked in nearly $6 billion in net profits in 2022. Furthermore, Berkshire boasts a hefty 92% stake in Berkshire Hathaway Energy, whose potential worth could rival that of Mount Olympus.