Apple’s market value ended a trading session above $3 trillion for the first time on Friday, lifted by signs of improving inflation and bets that the iPhone maker will successfully expand into new markets. Shares of the world’s most valuable company jumped 2.3% to $193.97, giving it a market capitalization of $3.05 trillion, Refinitiv data showed. That pushed the stock to its fourth straight record high close. It also values the company at over 29 times expected earnings, compared with the average of about 13 for tech stocks in the S&P 500 index.
The milestone valuation is a testament to the technology empire built by the late Steve Jobs and to the resilience of a product lineup that includes the iPhone and iPad that generate steady revenue and income despite economic booms, busts, and the pandemic. Apple’s share of the smartphone market remains in the top spot globally, and it has been able to diversify beyond its core product by expanding into services, such as music and video streaming, warranty programs, and the fees it collects from iPhone app stores and for using Google as the default search engine on its devices.
A decade ago, Apple’s stock was trading below US$100 a share, and the company had only a $16 billion market cap when Jobs returned to the helm of the Cupertino, California, firm in 1997. It took less than two years to reach the $1 trillion mark and a little more than two years to hit $2 trillion.
On January 3, 2022, Apple briefly traded at levels that would have given it a $3 trillion market capitalization but could not close above the threshold as the global economic slowdown weighed on stocks. However, the company has recovered from the global downturn this year, and its shares have climbed 46% in 2023.
Investors are betting that the Federal Reserve will soon slow its campaign of interest rate increases and that a pickup in global economic growth will boost corporate profits. Heavyweight growth stocks like Apple, Nvidia Corp (NVDA.O), and Tesla Inc (TSLA.O) have rallied this year on those bets. They are also boosted by optimism about the potential of artificial intelligence to drive more productivity and create new products for consumers.
Citi Research initiated coverage on Apple with a “buy” rating and $240 price target, saying that the Street underestimates the ability of the company to continue gross margin expansion from a shift toward higher-end iPhones and a stronger push into emerging markets. The investment bank expects those trends to drive additional gains for the stock, which it sees heading toward $425 in the long run. It is not the only Wall Street bank bullish on Apple this week. Wedbush Securities also launched stock coverage with a “buy” rating and a $220 price target. It believes investors have “severely underappreciated the massive installed base upgrade opportunity for iPhone 14” and a “mini super cycle” for the next model this fall.
