Apple Closes in on $3-Trillion Market Value

Apple investors remain confident that flush consumers will continue to pay top dollar for the company’s products and services.

Apple Closes in on $3-Trillion Market Value

Apple's stock rose about 11 percent last week

  • Apple shares closed at $175.74 (roughly Rs. 13,300) on Monday
  • Apple shares have returned 22 percent per year since the 1990s
  • Microsoft has a market value of roughly $2.6 trillion

Apple's market value hovered just shy of the $3 trillion (roughly Rs. 2,27,72115 crore) mark on Monday, following a stunning run over the past decade that has turned it into the world's most valuable company.

The company's shares fell just over 2 percent on Monday to close at $175.74 (roughly Rs. 13,300), reversing earlier gains that saw them approach the $182.86 (roughly Rs. 13,800) price needed to record a $3 trillion market value. Apple's stock rose about 11 percent last week, extending its more than 30 percent year-to-date gain as investors remain confident that flush consumers will continue to pay top dollar for iPhones, MacBooks and services such as Apple TV and Apple Music.

The iPhone maker's march from $2 trillion (roughly Rs. 1,51,81210 crore) to near $3 trillion (roughly Rs. 2,27,72115 crore) in market value took 16 months, as it led a group of megacap tech companies such as Google-parent Alphabet and that benefited from people and businesses relying heavily on technology during the pandemic. By comparison, Apple's move from $1 trillion (roughly Rs. 7,59,0750 crore) to $2 trillion took two years.

"It's now one of the more richly valued companies in the market, which shows the dominance of the US technology in the world and how confident investors are that it will remain in Apple's hands," said Brian Frank, a portfolio manager at Frank Capital who sold his long-standing position in Apple in 2019 as the stock's valuation rose.

"It seems like the stock has priced in every possible good outcome." Among new revenue lines that investors expect are a possible Apple Car, alongside growth in service categories such as apps and TV that still remain well below the 65 percent of the company's revenues generated by sales of iPhones, said Daniel Morgan, senior portfolio manager at Synovus Trust Company.

Eclipsing the $3 trillion milestone would add another feather in the cap for Chief Executive Tim Cook, who took over after Steve Jobs resigned in 2011, and oversaw the company's expansion into new products and markets. "Tim Cook has done an amazing job over the past decade, taking Apple's share price up over 1,400 percent," OANDA analyst Edward Moya said.

Apple shares have returned 22 percent per year since the 1990s, while the S&P 500 has returned less than 9 percent annually in the same period. If Apple hits the $3 trillion milestone, Microsoft will be the only company in the $2 trillion club, while Alphabet, Amazon and Tesla have crossed $1 trillion.

Microsoft, which has a market value of roughly $2.6 trillion (roughly Rs. 1,97,38030 crore), was the world's most valuable company as recently as late October when Apple reported that supply chain constraints could weigh on its growth for the remainder of the year

Large technology stocks have rallied this year with investors tapping increasing demand for cloud-based products as companies shifted to a hybrid work model and consumers upgraded their devices

The Nasdaq 100, which is top-weighted by large companies such as Apple, is up nearly 26 percent this year, while the broader S&P 500 index is up roughly 24 percent.

The emergence of technologies such as 5G, augmented reality/virtual reality, and artificial intelligence may also help Apple and other cash-rich large technology stocks remain in favour with investors as the global economy puts the coronavirus pandemic behind it and supply chain pressures ease

"I am in the camp that are experiencing another 'Super Cycle' with the iPhone12/iPhone 13 franchise," wrote Daniel Morgan, senior portfolio manager Synovus Trust Company, in a note. "And that AAPL is lifting off to another string of quarters with strong revenue and profit growth."

This week on Orbital, the Gadgets 360 podcast, we discuss iPhone 13, new iPad and iPad mini, and Apple Watch Series 7 — and what they mean to the Indian market. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.
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