As of this writing, there are 11 companies that carry a market capitalization of at least $1 trillion. Investors who got in on these businesses early on certainly benefited from huge portfolio gains. This might push you to try and identify potential new entrants to the 13-figure club in the future.

There’s one industry-leading enterprise known for its innovative culture and success at disrupting an entire industry — and it’s currently worth about $500 billion. Its shares have been a monster winner, rising 1,250% just in the past decade.

Can this unstoppable stock join the coveted $1 trillion club by 2035? Here’s what investors need to know.

Becoming a thriving business on a global stage

The dominant company that could be on its way to a trillion-dollar valuation is Netflix (NFLX -0.14%). It deserves credit for introducing the world to streaming video entertainment, completely upending the traditional cable TV industry. Becoming a leader in the internet age definitely allows Netflix to be placed in the same category as businesses worth more than $1 trillion.

Netflix’s growth has been impressive. Between 2014 and 2024, revenue increased at a compound annual rate of 21.6%. That top-line figure was up 12.5% in the first quarter. This was propelled, unsurprisingly, by quickly adding new members across the globe.

Previously unthinkable strategic pivots are now normal. Netflix has a presence in video games, and it’s getting more involved in showing live events on the platform. What’s more, the leadership team has found success by clamping down on password sharing. The cheaper, ad-based tier is also very popular, bringing in price-sensitive viewers.

These days, Netflix is a scaled media company that generates huge profits despite plans to spend $18 billion in cash on content just this year. Having a massive revenue and user base supports strong unit economics. The result is significant earnings and free cash flow generation.

The growth could continue for the foreseeable future. “We’re less than 50% penetrated into connected households,” CFO Spencer Neumann said on the Q4 2024 earnings call.

Looking at a realistic scenario

As mentioned, Netflix currently carries a market cap of about $500 billion. So, to see this figure reach $1 trillion in a decade, it would need to expand by 100% or roughly 7% per year. In the past 10 years, the market cap has climbed by a whopping 1,250%. Investors would expect a notable slowdown to occur, which I think is a reasonable way to view things.

Changes in the valuation can have a profound impact as well. Netflix shares trade at a price-to-earnings (P/E) ratio of 56.5, boosted by their incredible past performance. This is expensive, in my view. However, if we assume that the P/E multiple gets cut in half to 28 in 10 years, earnings per share (EPS) would need to grow at a compound annual rate of 15% between now and 2035 for the company to enter the $1 trillion club.

For what it’s worth, Netflix’s EPS has increased at a much faster clip in the previous decade. Taking all things into account, it’s very easy to believe the market cap will get to a 13-figure number in 10 years.

Should you buy the stock now?

It can certainly be exciting to own a stock that becomes a trillion-dollar enterprise. This usually means there are big returns on tap.

However, in this case, I believe investors should think twice before adding Netflix to their portfolios. Again, the valuation comes into play. At a P/E ratio that’s approaching 60, I think there is zero margin of safety for prospective buyers. In other words, Netflix must execute flawlessly with no hiccups for investors to maybe have the chance to achieve adequate returns.

It’s best to practice patience for now.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.

Looking back over the past decade and beyond, I don’t think there are many folks out there who would deny just how impressive Tesla‘s success has been. This innovative business, led by polarizing CEO Elon Musk, disrupted the global auto industry with its electric vehicles (EVs).

While the EV stock trades 32% below its peak (as of June 10), that’s still a gain of 1,810% in the past 10 years. That long-term performance made it one of the world’s largest tech companies, which is why Bank of America analyst Michael Hartnett gave it a spot in the “Magnificent Seven” when he introduced the idea of the group in 2023. However, I think it’s time to swap the EV maker out of this unofficial grouping and replace it with the more-deserving Netflix (NFLX -0.35%).

Tesla’s struggles are hard to ignore

Over the years, Tesla shareholders grew used to seeing the company register jaw-dropping sales growth. The picture isn’t so rosy anymore, though. Its automotive revenue declined 20% year over year in Q1. In 2024, it reported its first-ever year-over-year drop in deliveries. And the company’s profitability has continued to slide as higher interest rates and a more competitive environment have put downward pressure on demand for its vehicles.

Musk’s push in the political arena might at first have been viewed positively by some investors, as he was positioning himself to have more influence in Washington, D.C., which could have benefited Tesla from a regulatory perspective. But both his time in President Donald Trump’s inner circle and his more recent exit from politics, as well as his highly public spat with Trump, have been huge distractions that have certainly damaged Tesla’s brand instead.

It’s safe to say that a company that was once in the fast lane is now stuck in traffic. Tesla will have a lot of work to do in order to get back to its prior glory.

Netflix just keeps winning

While Tesla faces a battle to get itself back on track, Netflix continues to flourish. The streaming stock is up 1,200% in the last decade. The company added 41 million net new customers in 2024, bringing its total to nearly 302 million at year’s end. While Netflix chose to stop publicly reporting the number of subscribers it has starting this year, it did increase revenue by 12.5% year over year in the first quarter.

It might seem like this streaming platform has saturated its market. However, co-CEO Greg Peters believes there are still “hundreds of millions of folks to sign up.” By continuing to focus on creating compelling content offerings all over the world, Netflix is in a position to keep its expansion going. Wall Street’s consensus analyst estimates are for its revenue to rise at a compound annual rate of 12.3% between 2024 and 2027.

The streaming industry, like the automotive market, is extremely competitive. Netflix co-founder and former CEO Reed Hastings previously said that he counts sleep among the company’s key competitors. I don’t believe this was a stretch. Netflix goes up against all the other activities consumers can do when it’s time to wind down and relax.

But to be more specific, people have an almost unlimited number of viewing options at their fingertips today. Netflix is in the lead, though. Data from Nielsen shows that Netflix commanded 7.5% of video viewing time in the U.S. in April, only behind YouTube, which isn’t necessarily an apples-to-apples comparison due to the latter largely featuring user-generated content.

With its massive subscriber base, and trailing 12-month revenue of $40 billion, Netflix has the financial strength to spend a lot on content and marketing. And it’s still able to bring in billions in free cash flow each year.

It’s important to highlight that the “Magnificent Seven” is not an official index like the S&P 500 is. However, with each passing quarter, Netflix continues to make the case that it deserves to be mentioned with the tech giants in that group. Given the streaming pioneer’s ongoing success, it belongs in that exclusive club instead of Tesla.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix and Tesla. The Motley Fool has a disclosure policy.