Apple Inc. made history yet again, achieving a market capitalization of $3 trillion on Friday, marking another significant milestone in the company’s growth. This is a testament to the robust investor confidence in Apple’s diverse portfolio of products and services, despite recent warnings from the company of potential revenue declines. The shares rose by approximately 1%, reaching a new record and crossing the required $190.73 per share to reach this unprecedented threshold, as reported by CNBC’s latest share count.
The tech giant first attained a $3 trillion market cap during intraday trading in January 2022, though it fell short of maintaining that level by close of the trading day. However, Friday presented another opportunity for Apple to sustain this milestone by the day’s close. The increasing investor enthusiasm for Apple’s stock indicates a bullish sentiment, even in light of the company’s forecast of a roughly 3% fall in its current quarter revenue.
Apple’s performance shines brightly against a turbulent backdrop in the tech sector, where other giants are pledging to ‘do more with less’ and resorting to massive layoffs amidst a ‘year of efficiency’. As stated by Dan Ives, a senior equity research analyst at Wedbush Securities, many skeptics have referred to Apple’s ‘broken growth story’ in this challenging climate. Contrarily, he believes Apple is poised for a massive growth renaissance over the next year or so.
In his opinion, the market has significantly underestimated the huge potential for upgrades from Apple’s installed user base around the iPhone 14 and the upcoming ‘mini super cycle’ iPhone 15. Notably, around a quarter of Apple’s loyal customer base has not upgraded their iPhones in over four years. With Apple shares already up about 47% year to date, this forecast suggests an additional upside.
Apple’s market cap surge occurred as shares of the iPhone maker leaped by over 1% to an all-time high of $192 during morning trading. The company is currently valued at $3.02 trillion, maintaining its status as the only company in history to cross the $3 trillion mark. Even more striking, Apple is nearly $500 billion more valuable than the next-largest company, Microsoft ($2.5 trillion), while other industry giants such as Saudi Aramco ($2.1 trillion), Alphabet ($1.5 trillion), Amazon ($1.3 trillion), and Nvidia ($1 trillion) follow suit.
During its most recent fiscal year, Apple reported $394 billion in sales and $100 billion in profit, making it the second-most profitable company globally, just behind Saudi Aramco. Currently, Apple’s weight on the S&P 500 stands at 7.5%, making it the most influential component of this widely-tracked index. Its nearly $940 trillion in added valuation this year accounts for roughly a fifth of the S&P’s $4.4 trillion in total added market cap.
Nevertheless, it’s important to remember that this surge in Apple’s stock comes even after the company posted consecutive quarters of year-over-year revenue declines for the first time in four years. In a note to clients earlier this month, UBS analysts led by David Vogt downgraded their rating for Apple shares from a buy to a hold. They justified the downgrade by stating that the stock doesn’t offer a compelling risk/reward balance, particularly in light of dampened iPhone sales expectations amid a shaky macroeconomic climate.
