Last Friday marked an historic day for Big Tech. Apple hit a US$3 trillion mega market cap and stayed there - as opposed to this year’s temporary January jump - making it the world’s largest company. That marks year-to-date (YTD) growth of 54% and one year growth of 38.5%. Not too shabby for a tech company founded in 1976 by ‘college dropouts’ Steve Jobs and Steve Wozniak a year after Microsoft.
🎱 Better than winning a few lines in Lotto for some, too. If an investor bought just one US$22 Apple (AAPL) share when it listed on the US share markets in 1980, it’d be worth US$6,206.14 today - an increase of nearly 28,110% and 27% annual rate of return, nearly triple the average market return of 10%.
Investors in the S&P 500 are now dancing in the green, with Apple comprising 7.7% of the index, which helped the stock to rally. It boosted the Nasdaq 100 too, helping the index to reach its ‘best-ever first half ever’ at nearly US$5 trillion.
The Trillion Dollar Tech Club 💰
- Microsoft (MSFT) US$ 2.5 trillion market cap - founded in 1975, public in 1986
- Alphabet (GOOGL) US$1.5 trillion - founded in 1998
- Amazon (AMZN) US$1.3 trillion - founded in 1994
- Nvidia (NVDA) US$1 trillion - founded in 1993
Analysts expectations are mixed:
- Citi analyst Atif Malikhas believes Apple could rally again another 30% in the short term due to ‘consistently gaining share’ from Android smartphones
- Wedbush Securities’ Daniel Ives is talking of a US$4 trillion valuation by 2025, highlighting the potential opportunity of an Apple AI app store
- But UBS downgraded Apple stock and broadly, Bloomberg data suggests analysts aren't anticipating ‘additional gains’
Planned or fluke? We’ve come a long way since a turtle-necked Jobs announced the first iPhone in 2007, paving the way to watching awkward cute videos, from our wrists to our fingertips. Franklin Equity Group’s Jonathan Curtis said the US$3T market cap is down to Apple ‘executing on a business strategy that works’ and having a strong balance sheet. On the flipside, others view that Apple is short on fundamentals.
As Apple prepares for their September iPhone 15 launch, it’s the iPhone 14 and Apple’s abundance of services (Apple Music, TV+, Pay, Care, iCloud…) that helped the tech giant’s May earnings, which while beating expectations, still fell. But it was the popularity decline of Apple’s gadgets - from iPads, Macs, AirPods, Beats headphones to the Apple Watch - that hurt revenue the most.
🚨 Apple warns they don’t expect to dodge economic challenges. The tech company couldn’t avoid pandemic production snags, and their finance chief Luca Maestri told analysts in May they expect next quarter revenue to decline 3%.
Vision Pro has a long way to go. While some analysts and tech heads applauded Apple’s bulky mixed reality headset Vision Pro, many couldn’t see consumers hurtling over the barrier-to-buy US$3,499 price tag - not even Apple boss Tim Cook - leaving the company paddling fast to deliver cheaper headsets.
The role of AI in Apple’s future. While the world awaits ‘what’s next?’ in AI, CEO Cook skimmed over AI questions during the company’s May earnings announcements. And at their WWDC (Worldwide Developers Conference), AI wasn’t mentioned, ‘not even once’, despite Apple being open about an AI future. Word on Wall Street from others, however, is that AI’s influence could ‘revolutionize’ the Apple ecosystem.