Reaching a trillion-dollar valuation is a milestone that only a small cohort of companies have ever achieved. Currently, there are seven public companies with market capitalizations exceeding $1 trillion. These companies are:

1. Apple: 3.5 trillion dollars
2. Nvidia: 3.4 trillion dollars
3. Microsoft: 3.2 trillion dollars
4. Alphabet: 2 trillion dollars
5. Amazon: $1.9 trillion
6. Metaplatforms: $1.4 trillion
7. Taiwan Semiconductor manufacturing: 1 trillion dollars

In addition to the above companies, an electric vehicle company Tesla and the financial heavyweight of Warren Buffett, Berkshire Hathawayalso had short-lived memberships in trillion dollar club in earlier periods.

With the exception of Berkshire, every other company that has managed to reach a trillion-dollar valuation shares two things in common: each is a technology company, and all are fueling the artificial intelligence (AI) revolution. While I suspect other AI opportunities could one day become billion-dollar stocks, I see another company as a more likely candidate in the near term.

Below I will explain why Netflix (NFLX -0.74%) is my top pick for the first non-AI tech company to reach a trillion-dollar valuation.

The king of the streaming kingdom

In recent years, the streaming landscape has become increasingly popular. As viewers continue to cut the cord with traditional cable operators, networks are forced to derive growth from other opportunities. One of the most widely adopted strategies is for networks to move original content to their own streaming platforms.

Although such an approach gives viewers an additional option when it comes to consuming content, I think people have become overwhelmed (and perhaps irritated) by all these new services. Simply put, I wouldn’t be surprised if the average TV enthusiast had at least signed up and tried new services like Peacock and Paramount+, for example. My question is: how long do these new users typically stay? I guess it’s not long.

According to a study published by Big Four accounting firm EY, the “average streaming household” subscribes to five platforms. That said, two-thirds of subscribers have canceled some of their services in the past year, with 37% of respondents saying some of these services were not being used.

Yet despite the intense competition for audience and attention, one platform stands out from the pack. With 283 million subscribers worldwide, Netflix has built tremendous scale well ahead of any competing service.

While much of the company’s growth to date has come from its extensive library containing both original content and some of the entertainment industry’s most beloved television and film franchises, other opportunities to The horizon could lead to a whole new wave of growth for Netflix.

Image source: Getty Images.

New opportunities on the horizon

During the third quarter (ended September 30), Netflix added 5.1 million new subscribers – well above Wall Street expectations. One of the drivers of this growth can be attributed to the company’s new level of advertising.

A few years ago, Netflix launched a discounted subscription offer that includes commercial breaks while watching a show or movie. According to management, adherence to the advertising plan increased 35% year over year during the third quarter.

While this growth is encouraging, management told investors that advertising is not “expected to be the primary driver of our revenue growth in 2025.” Given that Netflix’s revenue is already growing 15% year over year, I find the future benefits of advertising particularly optimistic.

Another opportunity that I think will pay off for Netflix is ​​the introduction of its immersive experiences, called Netflix House. To be clear, I don’t think Netflix House will be a big moneymaker for the company – at least not directly.

But in a similar vein to Disney World, I think bringing fans of Netflix’s hit shows into an immersive world where they can experience the content in a different way will help build brand loyalty for the business. To me, Netflix is ​​evolving into a more full-spectrum entertainment company looking to connect with its users beyond video streaming.

The path to $1 trillion seems achievable

For the full year 2024, Netflix management is guidance for a total turnover of approximately $38.8 billion. Additionally, management said during the third-quarter earnings conference call that revenue in 2025 is expected to be between $43 billion and $44 billion, or about 11% year over year.

Assuming a growth rate of 11% over the next decade, Netflix would generate $96.2 billion in sales by 2033. If I use the company’s current revenue, price-sales ratio (P/S) of 8.8, I would reach a market cap of $847 billion by the end of my forecast period.

In fact, it’s below my trillion-dollar forecast. But here’s the thing: Forecasting Netflix’s revenue that far into the future is quite difficult, given that investors don’t have much insight into what the initiatives surrounding advertising and Netflix House might bring in.

In my opinion, Netflix House will help the company maintain its subscriber base while opening a new door to acquire new viewers. For this reason, I believe the real opportunity with Netflix House is to improve customer lifetime value (LTV) mechanics. Additionally, I view the advertising opportunity as one that should entice viewers to stay on the platform at a lower cost than other streaming alternatives.

As such, I believe Netflix will begin to experience an acceleration in revenue and operating profits in the coming years. If Netflix started generating higher margins and industry-leading unit economics across its subscriber base, I think there’s a good chance the company’s valuation multiples would increase significantly.

For this reason, I view Netflix as a likely candidate to become a member of the trillion dollar club over the next few years.