Apple breaks through $3tn valuation as shares hit all-time high
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Apple's market worth exceeded $3 trillion on Friday as its stocks reached a new all-time high, accompanied by a robust performance in the broader technology industry.
The company's stock experienced a 1.6% increase, reaching a value of $192.64. Concurrently, the Nasdaq Composite index, which focuses on technology, saw a rise of 1.3%. This surge positions the index for its most impressive performance in the first half of a year since 1983, as reported by Bloomberg's data.
The S&P 500, the main stock market index of Wall Street, increased by 1 percent. This was fueled by a pleasant surprise in the form of lower inflation rates, which led investors to believe that interest rates may soon reach their highest point.
Apple's worth on the market has surged by 45% this year, accumulating a staggering $1 trillion increase in value and greatly surpassing the broader S&P 500 index's 14.5% growth. Back in the early days of 2022, Apple initially surpassed the impressive milestone of $3 trillion.
With Tim Cook at the helm, Apple has expanded beyond the combined size of Alphabet and Amazon, and has surpassed Microsoft by a staggering half a trillion dollars.
According to Shannon Cross, an analyst at Credit Suisse, investors are optimistic about the recent growth in profit margins. This positive trend has been driven by a rise in sales of premium iPhones and the strong performance of services offered by Apple.
In August 2018, Apple made history as the inaugural company to reach a market valuation of $1 trillion. Fast forward two years, and Apple achieved yet another extraordinary feat by becoming the first company to hit a mind-boggling $2 trillion valuation.
In 2022, Apple's stock value soared to $3 trillion on the initial trading day. However, this achievement was short-lived as the markets experienced a downward spiral due to Russia's complete invasion of Ukraine. During that period, Apple's shares peaked at $182.86, which is actually lower than the current value. This drop can be attributed to the company's strategy of buying back a significant number of shares, resulting in a reduced availability.
Apple stocks finished the previous year with a decrease of 29 percent. The company's earnings were limited during the festive season as a result of Covid-19 breakout in Foxconn's manufacturing hub, famously known as "iPhone city" in Zhengzhou. This unfortunate situation led to temporary closures of production lines and workers expressing their dissatisfaction through protests against strict policies.
The new achievement of the prominent technology company holds greater importance than its previous milestone reached in January 2022. During that time, the overall value of the S&P 500 was over $40tn, which is now reduced to $36.5tn according to S&P Dow Jones Indices.
Numerous businesses during that period had profited from the surge in remote work caused by the pandemic and achieved inflated values that were not feasible in the long run. The Federal Reserve of the United States had not yet initiated its strategy of increasing interest rates to combat inflation.
Microsoft's share price has also experienced an impressive increase of around 50% this year due to the considerable excitement in the market surrounding artificial intelligence. This surge can be attributed to Microsoft's strategic collaboration with OpenAI, the up-and-coming company responsible for ChatGPT, allowing Microsoft to establish itself as a frontrunner in this field.
The reasons behind the significant increase in Apple's stock are not as clear, as they have experienced two consecutive quarters of decreased revenue after enjoying 14 quarters of continuous growth. Experts also predict that Apple's full-year revenues for this year will amount to $385 billion, which is a decrease of 2.4% and only the third decline in the past 22 years.
However, Apple has a promising future in terms of growth as the iPhone continues to gain popularity worldwide, especially in India and other developing nations where its market share remains in the single digits.
According to Cross, the whopping $3tn valuation of Apple signifies the company's persistent dedication to advancing and overseeing the major components of their intellectual property, such as software, hardware, gadgets, and services. Their primary goal remains to offer unparalleled customer satisfaction through their products.
Tom Forte, a DA Davidson analyst, credited Apple's surge to an enhancement in the supply chain following China's decision to halt its zero-Covid policy in the previous year. Additionally, investors have been directing more funds towards high-quality stocks in the aftermath of the Silicon Valley Bank's downfall in March.
The recent peak also arrives three weeks after the unveiling of a costly headset by the iPhone manufacturer, which could potentially chart the company's path away from the smartphone industry.
The Vision Pro "spatial computing" helmet is widely regarded as Apple's most important product debut since the introduction of the iPhone in 2007.
According to Evercore ISI, Apple has the potential to sell around 14 million headsets in the initial period, although this would be a slower start compared to their previous products such as the Apple Watch or iPhone. However, with each unit priced at $3,500, the investment bank predicts that Apple could generate an additional $19 billion in revenue within a five-year timeframe.