Apple Inc.’s stock market value briefly rose above $ 3 trillion on Monday, breaking another record and underscoring how the pandemic has fueled the rise of big tech for decades.
The stock rose as much as 3% to trade at $ 182.88 in afternoon trading in New York before cutting some of its gains. It was last traded at $ 182.16, a gain of 2.6% representing a market capitalization of around $ 2.99 trillion. The advance came in a broadly positive session for stocks on the first trading day of 2022, where the outperformance of both Apple and Amazon.com Inc. contributed to a gain of more than 1% for the Nasdaq 100 index.
The iPhone maker’s stock price has risen steadily for years, leaving it at more than 200% since Covid first sent the world into a lockdown in early 2020 and underscored the centrality of technology to work, education, entertainment and staying connected. Apple’s rally has come alongside revenue growth and is betting that key products, along with new offerings such as virtual reality headsets and autonomous electric vehicles, have a strong long-term outlook.
“I never thought I’d see a $ 3 trillion market capitalization, but it really speaks to Apple’s prospects for the next five to 10 years,” said Patrick Burton, co-portfolio manager of the MainStay Winslow Large Cap Growth Fund, which holds about 2 , 75 million Apple shares. “We feel very good about the prospects and continue to see significant opportunities in the future, with a stable iPhone franchise and growth drivers for both services and new products.”
The stock first reached $ 1 trillion in value in mid-2018 and reached a valuation of $ 2 trillion in August 2020. While it was the first American company to exceed that level, Saudi Aramco was the first 2 trillion company. trillions of dollars in total. Apple’s size means it has a pronounced influence on the broader stock market; its weight within the S&P 500 index is 7%.
Since it first became the world’s most valuable stock in 2011, when its market cap was less than $ 340 billion and it comprised about 3.3% of the S&P 500, Apple has rarely been far from the title. It briefly fell behind Microsoft Corp. in October, after warning of the impact supply chain problems would have on its holiday quarter, though that second-place status was short-lived. Over the past month, the stock rose nearly 13%, compared with a 3.4% rise at Microsoft, which now has a valuation of more than $ 2.5 trillion.
Despite the optimistic outlook, there are risks to Apple’s advance.
The company faces the harshest regulatory atmosphere in its history, with governments in the US and India for its App Store practices and dealings with third-party developers. Any law affecting Apple’s practices could limit its revenue from Services, now one of the company’s most important segments.
From a product perspective, Apple is also struggling and competing with new rivals. The company’s upcoming virtual and augmented reality headsets will compete with the team at Meta Platforms Inc., formerly Facebook. His long-running car project has also run into bumps with ever-changing goals and key exits.
Apple’s advance also causes the stock to trade at a price higher than its average historical multiple, according to data compiled by Bloomberg. The stock is nearly 5% above analysts’ average target price, suggesting that while nearly 80% of companies recommend buying it, most consider it to be fair value.
“It’s not particularly cheap at the moment, so I wouldn’t endorse the truck to buy, but it deserves to be expensive,” said Rhys Williams, chief strategist at Spouting Rock Asset Management. “As long as the iPhone cycle is intact, it is unlikely to underperform significantly than the market, and if you come out with an electric vehicle, then the stock would look cheap because that’s a huge potential market.”
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