The Rolls-Royce (LSE:RR) share price has been in overdrive since CEO Tufan Erginbilgiç took over. The FTSE 100 star returned 221.6% in 2023, 89.7% in 2024, and 104.1% in 2025.

So far in 2026, it’s up another 32%. The cumulative compounding effect of these figures means investors holding throughout have done very well, to put it mildly.

Yet according to Erginbilgiç, Rolls-Royce has the potential to become the UK’s most valuable company, driven onwards by the artificial intelligence (AI) revolution. How realistic is this claim?

AI, you say?

Some may be wondering why an engine maker might benefit so much from AI. Isn’t that just chipmakers? Actually, Rolls-Royce is already benefitting from the AI boom. Its Power Systems division is capturing demand from data centres which can’t connect to the grid fast enough.

As such, the firm’s gas generators are increasingly being used as a primary power source, not just as back-up. Crucially, these engines generate significantly more aftermarket revenue over time than those used for back-up (which mostly sit idle).

By 2028, Rolls-Royce expects to have a more powerful engine available, specifically targeting the data centre market. It sees the commercial opportunity here stretching into the 2030s.

Pitching hyperscalers

The second way the company is linked to AI is through its small modular reactors (SMRs). Each one of these mini nuclear power stations will produce enough low carbon energy to power 1m homes for at least 60 years, according to Rolls-Royce SMR.

These haven’t gone unnoticed by cloud computing giants like Microsoft, Google, and Amazon. They’ve already started signing deals with SMR providers across the pond, with the first expected to be deployed around 2030.

Might we see these hyperscalers signing SMR deals with Rolls-Royce to power UK data centres? I wouldn’t rule it out. Rolls-Royce’s SMR and Power Systems teams now show up together when meeting with US hyperscalers.

Of course, we’re talking about the 2030s here, as SMRs are still in development. A lot could go wrong between now and then, from cost overruns to regulatory delays (something the UK is notorious for).

In the meantime, customers will have to make do with the firm’s gas engines.

How does the competition stack up?

To become the UK’s largest listed firm by market-cap, Rolls-Royce would have to overtake four companies.

Based on these numbers, the stock would have to more than double to about £32 per share. Of course, this assumes the other valuations stay static, which won’t happen. So the stock might have to rise above £40 to take the top spot.

Is this realistic? I think it’s doable, with the top five hyperscalers on track to spend $1.3trn next year. The data centre and defence markets are both booming.

But I don’t see it happening anytime soon. Due to the stock’s high starting valuation, the company would need flawless execution, while I also see HSBC and AstraZeneca getting larger in future.

That said, the beauty about Rolls-Royce is that it isn’t reliant on AI to succeed. Beyond its core civil aerospace business, it has long-term growth opportunities in defence and SMRs deployed for energy security and the green transition (not just AI).

As such, I think the stock’s worth considering buying on any dip.

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Ben McPoland owns shares in AstraZeneca, HSBC, and Rolls-Royce.