As investors prepare for Apple Inc.’s (NASDAQ: AAPL) earnings report, its shares continue to reach new highs and increase its market value ever further into record territory. Yesterday, it rose above $2.4 trillion. At least one analyst expects sales of iPhones, in particular, to move that figure to over $3 trillion in the next 12 to 18 months. For the time being, barring weak results from the prior quarter, its relentless increase seems likely to continue.
To put Apple’s market cap in perspective, it has risen to be almost twice that of the comparable figure for the fourth most valuable company in America, Alphabet Inc. (NASDAQ: GOOGL), parent to Google, Android and YouTube. Alphabet’s market cap is $1.29 trillion. Between it and Apple, Amazon.com Inc. (NASDAQ: AMZN) has a market cap of $1.67 trillion, and that at Microsoft Corp. (NASDAQ: MSFT) is $1.76 trillion.
Apple’s shares are also up more in the past year than the other three companies with market caps above $1 trillion. Its stock has surged 80%. By comparison, shares of Microsoft are 41% higher over the same period, Amazon’s are up 79% and Alphabet’s by 30%.
Most market analysts pin Apple’s success primarily on two factors. One is a revival of sales of the company’s iPhone flagship. After they faltered over the past two years, the introduction of the iPhone 12 has triggered what is known as a supercycle. As hundreds of millions of people around the world migrate their service to the new 5G superfast wireless standard, this is driven by Apple, its competition and carriers like AT&T, Verizon, T-Mobile and their counterparts in Europe, Japan and China. Because these networks will not roll out entirely for at least two years, the upgrade cycle will last for at least that long. That is among the reasons that the average Wall Street analyst estimate for iPhone sales last quarter is above 70 million, with a revenue forecast above $100 billion.
Not as important as iPhone sales, but still critical to the stock price increase, Apple’s services business probably is still its fastest growing. It includes Apple’s app and music businesses, its payment systems, personal cloud products and the range of Apple TV products. Additionally, Mac, iPad and smartwatch sales have picked up, according to industry researchers.
Apple might be a year or more away from a $3 trillion valuation. The stock market and economy overall will need to help. However, if Apple hits the high end of forecast metrics for its businesses, it is well on its way.
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