Market capitalization is the total value of a company's stock, or the amount of shares multiplied by the share price. It doesn't tell you anything about a company's performance or prospects, but it does tell you what the market thinks of it, to some extent. The more favored a stock is, the likelier it is to have a high market cap. However, most newer companies have lower market caps because they haven't even started growing. So, it's a combination of investor sentiment and a proven track record.

The most valuable companies on the stock market by far these days are big tech stocks, with the top three slots going to Apple, Nvidia, and Microsoft, although those three slots have changed hands a few times over the past few months. But you might be surprised that the next tier of most valuable companies are mostly large, older value stocks, like Berkshire Hathaway (which just achieved trillion-dollar status), Walmart, and Visa.

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Nvidia stock is up 250% over the past year, which is how it jumped past older standards to reach the top of the market cap heap. It's on fire as clients line up to buy its graphics processing Units (GPU) that power generative artificial intelligence (AI), reporting fabulous sales and earnings growth. But are competitors catching up?

Amazon (NASDAQ: AMZN) is one Nvidia client that's also building its own chips. But it does a lot more than that. It has more revenue than Nvidia, Apple, and Microsoft, but it's only the fifth most valuable company on the market. Nvidia is right up there with Apple at nearly $3.5 trillion, but Amazon is way behind at almost $2 trillion. Here's why Amazon could soar past Nvidia over the next five years.

Amazon has no competition

Amazon's artificial intelligence efforts are gaining a lot of attention, but right now, it's just a small part of the vast Amazon empire. Amazon controls more than a third of all U.S. e-commerce, and that brings in the revenue that powers the entire enterprise.

Not only is Amazon likely to keep that lead, but it also has the opportunity to widen it by improving its logistics network, speeding up delivery times, adding products, and making Prime members even more reliant on its business. These are things that are already happening. E-commerce is also growing at a faster pace than physical retail, which means more organic growth for Amazon.

Generative AI is a new part of Amazon Web Services (AWS), Amazon's cloud computing business. It has launched a barrage of services targeting the gamut of needs across the board to beef up this business, and it's creating its own processing chips not to compete with leader Nvidia, but to offer an economic alternative for clients who want better pricing. AWS is the world leader in cloud computing, and like e-commerce provides the sales, AWS provides the bulk of the company's operating income.