In the US market, large technology giants have created a trillion dollar market value "club", and so far, they still occupy an undisputed dominant position in this high altitude that other industries need to look up to. However, in the near future, there may be outsiders joining their ranks for the first time.
Berkshire Hathaway, a subsidiary of Warren Buffett, and the popular weight loss drug company Lilly are both seen by the outside world as powerful challengers to the trillion dollar market value red line.
Both companies have now entered the top ten of the US stock market value rankings and have forcefully separated the previously ranked top seven companies - whether it's Berkshire or Lilly, their market value is now higher than Tesla, which ranks last among the top seven companies!
And these two companies appear particularly unique - different from each other and the tech giants they are chasing, which provides new choices for many US stock investors who previously focused mainly on tech giants.
Turtle and Rabbit
If we were to compare these two companies to a group of animals, then Berkshire's market value climb process may be more like a "turtle" with one step at a time, while Lilly is more like a "rabbit" light as the wind, leaping over the fields.
Berkshire, headquartered in Omaha, Nebraska, has been slowly and steadily expanding its market value for years, with its current market value approaching $900 billion. In contrast, the world's largest pharmaceutical company, Eli Lilly, has rapidly doubled its market value in the past two years and is currently in a strong trend - the global popularity of weight loss pills has led to Eli Lilly's market value exceeding $700 billion.
Last year, the stock prices of Berkshire and Lilly rose by about 15% and 59% respectively. In fact, as long as these two stocks can replicate the gains of 2023 in the coming months, their market value will both exceed $1 trillion, thus joining the ranks of technology giants such as Apple, Microsoft, and Nvidia.
Of course, such returns cannot be guaranteed, even Buffett, known as the prophet of Omaha, is no exception. He recently reminded investors to pay attention to this. Buffett stated in his annual letter to shareholders last weekend that the days when Berkshire's earnings were "astonishing" have passed.
However, the attractiveness of the constantly expanding scale itself may become one of the catalysts for stock prices. Quincy Krosby, Chief Global Strategist at LPL Financial, said, "If the market thinks it's a smart deal - Buffett usually does that - then they can further rise above the trillion dollar target line."
At the same time, industry analysts are increasingly optimistic about the prospects of Lilly. Earlier this month, Morgan Stanley analysts raised Lilly's target stock price to $950, the highest in the industry. Analysts at the bank are looking forward to whether Eli Lilly will become the first biopharmaceutical company with a market value of trillions of dollars, indicating that there is still considerable room for the company's stock price to rise.
Shams Afzal, portfolio manager at Carnegie Investment Council, believes that from treating heart failure to sleep apnea, Lilly's weight loss therapy is expected to expand into new markets, which may become a factor driving Lilly towards a $1 trillion market value milestone.
"Lilly has truly become a unicorn in this field," Afzal said. "The stock may not reach $1 trillion this year, but this milestone is not impossible to achieve."
New reliance for US stock investors?
Undoubtedly, as investors increasingly worry about the driving force behind the rise of the US stock market, these two companies undoubtedly provide investors with more choices beyond the "Big Seven" that led the rise of the US stock market last year - investors may be able to find new narratives beyond things related to artificial intelligence.
Matt Orton, Chief Market Strategist at Raymond James Investment Management, said, "In addition to technology companies, there are also two exciting companies. This has led people to talk about that besides large technology companies - there may be a lot of things that are still operating in the market that are worth paying attention to."
He added that this is usually a good thing - highlighting the breadth of non-technical fields.
Of course, if Berkshire can surpass the trillion dollar market value threshold, it may also need to partially rely on Apple, one of the seven giants. Apple is still Buffett's largest holdings. At least some analysts predict that the rise in Apple's stock price will push Berkshire beyond this integer limit.
In the United States, technology giants have long dominated the trillion dollar market value. Apple broke this ceiling for the first time in 2018. Microsoft broke the $3 trillion mark within the year, surpassing Apple to become the world's most valuable stock.
Going further down, Nvidia's market value is currently hovering around $2 trillion, while Amazon, Google's parent companies Alphabet, and Meta all have market values exceeding $1 trillion.
For US stock investors, if Berkshire and Lilly can also exceed the red line of trillion dollar market value in the future, it will undoubtedly break the "monopoly pattern" of technology giants on trillion dollar clubs for the first time. Perhaps it is not too late to start laying out these two companies right now. Perhaps one day in the future, this trillions dollar club's "gift" will really come?