Some `options` for 2025

Looking at the four large-cap tech stocks: Microsoft, Apple, Nvidia, and Alphabet. I sat down to evaluate them based on revenue growth, operating profit margins, and valuations to determine the best long term stock options to kick off 2025.

Nvidia has had the small trailing 12-moth revenue at $113B; however, it’s experiencing the fastest revenue growth among the 4. Its revenue growth has surged in the past 2 years - thanks to the increasing effectiveness of AI. While they are at the smallest in trailing 12-month revenue, it’s possible that Nvidia could become a leader in this metric within the next 5-10 years, depending on the accuracy of the forecasts for AI growth.

Nvidia boasts a high operating profit margin at 63%, their products are often (or always) in high demand, leading to out-off-stock for at least a year. And to top it all, Microsoft, Alphabet, Amazon and other large-cap tech stocks are among Nvidia’s most significant customers, paying premium prices for its products. 

Apple holds the largest trailing 12-month revenue of $391B. It recently resumed growth in the most recent quarter, although its growth rate is the slowest among these large-cap tech stocks.  However, its slower growth rate may allow other companies to catch up in the coming years. 

Microsoft ranks second with an excellent operating profit margin of 44%. Apple and Alphabet closely follow with operating margins of 31% each.

These companies have all demonstrated remarkable growth and profitability. Their success can be attributed to their exceptional business models, generating hundreds of billions of dollars in revenue while simultaneously expanding their operations. An operating profit margin of 30% is indeed impressive, especially considering the scale of these businesses. However, when compared to Nvidia’s impressive 60% operating profit margin, it appears relatively modest. 

I like both Nvidia & Alphabet, and both of them have excellent businesses.