Prediction: Nvidia will overtake Alphabet, Apple and Microsoft to become the world’s most profitable company by the end of 2027. Here’s why "Magnificent seven" The shares are purchased in January.
Prediction: Nvidia will overtake Alphabet, Apple and Microsoft to become the world’s most profitable company by the end of 2027. Here’s why "Magnificent seven" The shares are purchased in January.
By turning the majority of sales into profits, Nvidia is on track to become the most profitable publicly traded company in the world.
Nvidia has higher margins and its profits are growing faster than its “Magnificent Seven” peers.
Nvidia remains a leading artificial intelligence (AI) stock around which investors can build a portfolio.
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NVIDIA(NASDAQ: NVDA) and other actions of the “Magnificent Seven” Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), Apple(NASDAQ:AAPL), microsoft(NASDAQ:MSFT), Amazon(NASDAQ:AMZN), Metaplatforms(NASDAQ: META)and tesla(NASDAQ:TSLA) have increased in value so much in recent years that they now represent more than a third of the total market capitalization of the S&P 500(SNPINDEX: ^GSPC).
The five largest Magnificent Seven stocks by market cap also generate the most net income among U.S. companies, having matured from revenue-driven growth stories into highly profitable cash cows.
Here’s why Nvidia, currently the fourth most profitable U.S. company, can surpass Microsoft, Apple and Alphabet in net income over the next two years, and why the stock is a buy now.
Image source: Getty Images.
Nvidia ended 2022 with a split adjusted price of $14.61 per share and a market capitalization of $359.5 billion. Exactly three years later, Nvidia closed 2025 with a share price of $186.50 and a market capitalization of $4.5 trillion.
Nvidia has not only delivered for its shareholders: it has reshaped the markets: its shares represent a staggering 16.6% of the technology sector, 13.3% of the Nasdaq-100and 7.1% of the S&P 500.
Typically, such a drastic increase in a relatively short period of time is cause for concern. But Nvidia is unrecognizable from where it was three years ago.
YCharts data. TTM = last 12 months. EPS = earnings per share.
Nvidia is highly profitable, generates huge amounts of free cash flow, has sky-high margins, and has more than enough stock buybacks to offset its stock-based compensation: Nvidia spent $36.27 billion on stock buybacks during the nine months ended October 26, 2025, compared to just $4.75 billion on stock-based compensation.
Nvidia converts more than half of its revenue into after-tax profits and generates, on average, more than $2 million in net profits per employee. The stock has performed well because the company is highly efficient and has strong pricing power, making its earnings high quality.
Nvidia will most likely overtake Alphabet as the world’s most profitable company this calendar year or next, with Nvidia raking in $99.2 billion in net income in the trailing 12 months (TTM) compared to Alphabet’s $124.3 billion.
YCharts data. TTM = last 12 months.
Alphabet has a considerable lead, but Nvidia is growing much faster than Alphabet. However, it is worth noting that Saudi Arabian oil(SASO: 2222) It generated between $106 billion and $161 billion in annual net income between 2022 and 2024. Therefore, if oil prices rise, it could become the most profitable company in a given year. But for the sake of long-term earnings growth, we’ll stick with US technology-focused companies.
YCharts data. TTM = last 12 months. EPS = earnings per share.
Adding more than $4 trillion in market cap appreciation in three years is unprecedented, but so is going from less than $15 billion in earnings to arguably the most profitable publicly traded company in the world in a five-year span.
Nvidia has a lot going for it that could drive profits soaring in the coming years. On the one hand, it has very high operating margins.
YCharts data. TTM = last 12 months.
In recent years, some investors have worried that Nvidia’s margins will fall if demand slows and competition eats away at its market share. But that has not been the case. If anything, I could see Nvidia’s margins increase thanks to Rubin.
Rubin is the successor to Nvidia’s Blackwell semiconductor chip architecture, which was a game-changer for artificial intelligence (AI) data centers. But Nvidia has really outdone itself with Rubin, with massive efficiency improvements that should allow its customers to process large data sets faster, improving product performance and reducing costs.
Because Rubin is so technologically advanced, Nvidia can justify its premium price, which should allow it to turn most of its revenue into profits. At CES earlier this month, Nvidia said it would beat its previous estimate of $500 billion in orders and revenue from Blackwell and Rubin through the end of calendar year 2026, effectively outlining a well-defined runway for fiscal 2027 earnings, which ends in January 2027.
During the TTM, Nvidia generated $0.53 of net after-tax income for every $1 of revenue. If you can continue to convert about half of sales into net income, another way to look at that $500 billion revenue projection is $250 billion in net income. Not all of that will happen in one fiscal year, but it still paints a huge runway for Nvidia to eventually surpass Alphabet in profits within the next two years.
At roughly 40 times forward earnings, Nvidia is a great value given its dizzying growth rate. If the share price languishes, the valuation could drop significantly as Nvidia converts its backlog into realized profits.
Add it all up, and Nvidia remains one of the best AI growth stocks for long-term investors to buy in 2026 and hold for years to come.
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Daniel Foelber has positions at Nvidia. The Motley Fool positions and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. 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.
Prediction: Nvidia will overtake Alphabet, Apple and Microsoft to become the world’s most profitable company by the end of 2027. Here’s why ‘Magnificent Seven’ stocks will be bought in January. was originally published by The Motley Fool
