In today's video I talk about how Square (NYSE: SQ) could reach a trillion-dollar valuation. According to ARK Investment Management, digital wallets could be worth $4.6 trillion by 2025. I also talk about how Twitter could be another way Cash App gains more users and payment revenues. The use of artificial intelligence is going very under the radar, and that's an aspect of Square's business that people are not paying much attention to. Digital wallets: A $4.6 trillion opportunity Digital wallets aren't new and have been growing for years now. But let's take a look at the leader in that space, China. The volume of mobile payments in China has grown more than 15 times in just five years, from roughly $2 trillion in 2015 to an estimated $36 trillion, nearly three times the size of China's GDP in 2020. Digital wallet providers such as Cash App and Venmo can acquire customers for a fraction of what traditional banks pay. We've seen that Cash App's customer acquisition cost is around $5, but the potential value of these wallets can rise to $10,000-$20,000 if they become consumer financial dashboards where people view their insurance, shop, make payments, etc. The younger generation It's no secret the younger generation has adopted digital wallets faster than the older generation, but if you compare it to social media adoption, the boomers have adopted digital payments much faster. The big reason being that kids want their parents' money. Also, consider Lemonade. The majority of Lemonade's customers are at the beginning of their life journey, and Lemonade would like to grow with them and in turn get higher premiums as a person "graduates" from renter to homeowner and adds extra policies. The same could be said of Cash App: The older the person holding the digital wallet, the more highly it will be valued. Twitter plus Square If Twitter plans on monetizing its platform further, I think e-commerce is the way to do it. With Jack Dorsey the CEO of both companies, it wouldn't surprise me if Square/Cash App gets integrated or becomes the backbone of Twitter's e-commerce business. That would add countless new users to Cash App's and Square's ecosystem. Conclusion For Square to reach the trillion-dollar valuation, it needs a lot of things to go its way. It is currently valued at $117 billion. But I believe that if Square can continue to execute and expand worldwide, a trillion-dollar valuation isn't so farfetched. The ball is in Square's court. *Stock prices used were the closing prices of April 13, 2021. The video was published on April 15, 2021. 10 stocks we like better than SquareWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Square wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of February 24, 2021 Neil Rozenbaum owns shares of Lemonade, Inc. and Square. The Motley Fool owns shares of and recommends Lemonade, Inc., Square, and Twitter. The Motley Fool has a disclosure policy. Neil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.Source