Apple poised to surpass $3tn valuation again

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Apple’s market valuation is set to cross the $3 trillion mark again as shares of the US tech giant hit a new record in pre-market trading on Friday.

Shares of the company rose nearly 1 percent to $191.74 in pre-market trading in New York. Its market cap has risen 45 percent this year, adding nearly $1 trillion in market value and far outpacing the 14.5 percent gain of the broader S&P 500 index. Apple crossed $3tn in early 2022 for the first time.

Under the leadership of Chief Executive Tim Cook, Apple has become bigger than Alphabet and Amazon and has a half-trillion-dollar lead over its closest rival, Microsoft.

“Investors are positive on the margin expansion seen over the past few years, supported strongly by increased sales of high-end iPhones and in services,” said Credit Suisse analyst Shannon Cross.

Apple was the first company to achieve a valuation of $1tn in August 2018 and two years later became the first to reach a valuation of $2tn.

On the first day of trading in 2022, Apple touched the $3tn mark once before. However, the peak proved brief, and the market subsequently declined following Russia’s full-scale invasion of Ukraine. At that point, shares reached $182.86 — lower than they are now, as fewer shares are available after the extensive buyback.

Apple shares closed last year down 29 percent. An outbreak of COVID-19 at supplier Foxconn’s “iPhone City” in Zhengzhou cut revenue in the post-holiday quarter following production line shutdowns and worker protests against tough policy measures.

The tech giant’s latest record is arguably more significant than its previous peak in January 2022, when the broader S&P 500 was worth more than $40tn, compared to $36.5tn now, according to the S&P Dow Jones Indices.

At the time, many companies had benefited from the work-from-home trend due to the pandemic and moved towards volatile valuations. The US Federal Reserve has not yet started a rate-hike cycle to fight inflation.

Microsoft’s stock has also risen nearly 50 percent this year due to market hype around artificial intelligence, where it has become a leader following a partnership with OpenAI, the start-up behind ChatGPT.

The factors behind Apple’s rising stock are less clear, as after a 14-quarter streak of growth, it has posted quarter after quarter of revenue declines. Analysts forecast full-year revenue this year to be $385 billion, a decline of 2.4 percent and only the third decline in the past 22 years.

But Apple’s long-term potential to return to growth is strong as the iPhone continues to gain market share globally, especially in India and emerging markets where it has low single-digit market share.

Kraus said, “Apple’s $3 trillion market cap reflects the company’s long-term focus on developing and controlling the key elements of their IP – software, silicon, devices and services with a focus on delivering the best customer experience.” Is.”

Investment bank DA Davidson analyst Tom Forte attributed Apple’s rally to supply chain improvements after China ended its zero-Covid policy last year and investors pouring more cash into quality stocks following the collapse of Silicon Valley Bank in March. held responsible.

The new high also comes three weeks after the iPhone maker unveiled an expensive headset that could decide the company’s future direction beyond smartphones.

The Vision Pro “spatial computing” headset is largely seen as Apple’s most important product launch since the iPhone in 2007.

Evercore ISI estimates that Apple could sell 14 million headsets “in the first few years” — a much slower start than the Apple Watch or iPhone. But, at a price point of $3,500 per unit, the investment bank estimates it could add $19 billion in total revenue within five years.