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• Nvidia is currently the most valuable company in the world with a market capitalization of nearly $4 trillion.

• While Microsoft trails Nvidia by a small margin, both companies are facing rising competition in their core businesses — making future growth less predictable.

• Amazon is still in the early phases of integrating artificial intelligence (AI) across its ecosystem, and recent valuation trends could suggest that investors are expecting robust growth on the horizon.

• 10 stocks we like better than Amazon ›

For about a year now, semiconductor powerhouse Nvidia and cloud computing giant Microsoft have been trading places for the most valuable company in the world. But as Nvidia inches closer to the coveted $4 trillion milestone, it might seem like the company is leaving its “Magnificent Seven” peers in the dust.

Although Nvidia currently holds the title for the most valuable company, I think e-commerce and cloud infrastructure specialist Amazon (NASDAQ: AMZN) has a better shot at becoming the larger company in the long run.

Let’s explore the variety of ways that Amazon is already leveraging AI across its business and detail why the company’s robust growth prospects could lead to a considerable expansion in valuation over the next five years.

Amazon’s ecosystem spans e-commerce, logistics, consumer electronics, cloud computing, advertising, streaming, and much more. While AI has the potential to add value to each of these services, I think investors should hone in on how the technology could ignite significant growth across the cloud and e-commerce segments in particular.

Amazon derives the majority of its revenue from online sales, which generated a whopping $250 billion over the last year. Factors such as commoditized product offerings, expensive transportation infrastructure at global scale, and fluctuating shopping patterns from consumers make the e-commerce business a relatively low-margin business for Amazon, though.

Management has expressed intentions to make this area of the business more profitable by leveraging AI-powered robotics. Robotics can be integrated in Amazon’s warehouses to help automate mundane tasks alongside the human labor force. In addition, CEO Andy Jassy has even expressed that robots could assist in transportation and delivery of packages down the road.

Per a recent analysis from Morgan Stanley, robotics could help reduce costs by 25% in an individual warehouse. Considering Amazon has global scale, these cost reductions could theoretically expand profitability in e-commerce operations by billions in the long run.

Regarding its cloud business, Amazon has invested $8 billion into a start-up called Anthropic over the last couple of years. Anthropic’s services have been swiftly integrated into Amazon Web Services (AWS), and its impact on the business’ sales and profitability are already quite significant.

For much of the last couple of years, Nvidia’s graphics processing units (GPUs) have been considered the gold standard for generative AI development. And while many of the Magnificent Seven companies are Nvidia’s largest customers today, these dynamics may shift in coming years.

Although Nvidia and Microsoft are valued at premiums right now, I think both companies could struggle to fend off competition in the chip and cloud arenas.

AMZN PE Ratio (Forward) data by YCharts

Microsoft’s partnership with OpenAI may not be as lucrative as it once was, given the ChatGPT maker has been exploring partnership opportunities with Alphabet and Oracle as of late.

In addition, Amazon, Microsoft, and Alphabet are all investing significant capital in their own custom silicon development. Moreover, Advanced Micro Devices has built formidable data center and AI chip businesses that compete directly with Nvidia.

Amazon appears to be witnessing a degree of expansion based on the forward price-to-earnings (P/E) trends pictured above. To me, this signals that investors may finally be understanding that Amazon is uniquely positioned to further monetize its various service offerings by augmenting its ecosystem with AI.

Hence, the company’s market cap could rise considerably relative to its peers in the following years as AI becomes the core pillar supporting Amazon’s transformation.

Although Amazon stock isn’t a bargain now, I still see it as a compelling buy-and-hold opportunity for long-term investors. I do not think the upside that AI carries has been fully baked into the stock price, despite some noticeable expansion in recent months.

Considering the long-term accretive impacts AI could generate for Amazon’s core e-commerce and cloud businesses, I think the company is in the early phases of a new growth chapter featuring accelerating revenue and profits for years to come.

For this reason, I think investors could continue valuing Amazon at a premium relative to its peers and see the company emerging as the most valuable business in the world over its AI peers by early the next decade.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, Nvidia, and Oracle. 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: This Magnificent Artificial Intelligence (AI) Stock Will Be the Most Valuable Company in the World by 2030 (Hint: It’s Not Nvidia or Microsoft) was originally published by The Motley Fool

When Pakistan auctioned a 73 per cent stake in the then Karachi Electric Supply Company (KESC) in November 2005, the transaction was sold as a textbook case of how privatisation could cut fiscal leakages and deliver modern service to 20 million citizens.

For a decade that promise held, with Abraaj, taking management control in 2009, ploughing US $1.7 billion of consumer funded investment, into new generation, smart meters and theft-proof cabling, and slashed technical-and-commercial losses from 36 per cent to 22 per cent. EBITDA ballooned from a negative Rs4 billion in FY-2009 to a record Rs51 billion in FY-2017; annual tariff-differential subsidies fell by two-thirds. Karachi finally enjoyed round-the-clock power while the federal treasury saved money.

Then the lines blurred. Abraaj collapsed in 2018; its equity had to be off-loaded under court-supervised liquidation. Instead of one hard-nosed sponsor with capital and a clear exit path, K-Electric found itself controlled, de-facto, by minority shareholders from Saudi Arabia and Kuwait who together own barely a third of the holding company but exercise veto rights through offshore agreements. From that moment the governance conversation slipped from boardrooms to chancelleries. Every distribution-loss plateau, every delayed tariff true-up, every skirmish over receivables was recast as a bilateral issue among “brotherly countries” rather than a management problem inside a regulated utility.

It is also essential to note here that the operational and financial performance of the entity did not improve under control of the current minority shareholders, from 2005 to 2009, only to cede control to Abraaj, which improved overall performance over next eight years.

Following demise of Abraaj, fresh capital, or a controlling shareholder never arrived, or was never allowed to take control. The minority investors, that had ridden the upswing without adding fresh capital, pivoted from performance metrics to diplomatic leverage.

Karachi’s grid quietly paid the price. Transmission & Distribution Losses flat-lined at 15 per cent, no new megawatt of company-owned capacity has been commissioned in seven years, whatever generation capacity exists, is now more expensive than the grid, and EBITDA has tumbled two-thirds from its 2017 peak. The fiscal faucet reopened: tariff-differential subsidies jumped back above Rs75 billion in FY-2023 and KE’s receivable from various federal entities sit in excess of Rs164 billion.

Electricity networks are globally treated as quasi-monopolies with explicit social obligations. That is why regulators ring-fence them with multi-year tariffs, step-in rights and forced recapitalisation clauses. Allowing diplomatic considerations to override those frameworks undermines all three pillars at once.

A grid needs predictable equity injections, meanwhile diplomacy produces stop-start cash as negotiations drag on. Similarly, when every tariff order risks being escalated to a foreign office cable, regulators hesitate to issue decisions and backlog snowballs. Consumers balk at paying inflation-linked surcharges if they believe revenues serve a geopolitical agenda rather than service quality.

There exists clear global precedence, where Italy’s Enel, Spain’s Iberdrola and Brazil’s Neoenergia all invite foreign capital, but only through structures that sequester board governance from diplomatic currents. Independent governance needs to be hardwired and the sovereign should play a more active role on the board. Any strategic investment needs to be firewalled from board resolutions turning into diplomatic disputes. The regulator should be empowered to appoint an interim operator if loss-reduction targets are missed for two consecutive years, mirroring the UK’s Special Administration Regime for critical utilities.

Any expansion plan that does not result in expected improvement in efficiency must have a claw-back mechanism, to avoid expansion for the sake of it all, funded by consumers.

Investments that have been made by K-Electric since privatisation have been done through investment plans that are funded largely by the consumer. In such a scenario, it makes little sense that those financing investments have little to no say in the overall governance, but those who haven’t injected any capital in two decades continue to defer decisions for a city with a population of more two million.

A utility must not be used as a diplomatic bargaining chip. Starving its grid of capital and operational efficiency, because two minority investors see strategic symbolism is self-harm. It also sets a precedent that critical infrastructure may be held hostage to unrelated diplomatic goals, a precedent that will scare off exactly the technology partners Pakistan wants in other strategic areas.

The minority investors under question here have not added any fresh capital in last two decades. This is strictly a governance problem, and one must appreciate the management that has pushed through despite below-par governance, marred by overarching foreign policy engagements.

Separating foreign policy from core operations is not an abstract governance nicety, it is the only route back to sustained efficiency gains and lower subsidies. There should be no diplomatic immunity for bad performance.

The writer is an assistant professor of practice at the School of Business Studies, IBA, Karachi.