Apple Inc. Shatters Records with a $3 Trillion Market Valuation
Despite Market Fluctuations, Apple's Innovative Leaps and Boundless Growth Secure its Position as the World's Most Valuable Company | That's TradingNEWS
Amid global economic fluctuations, Apple Inc. ended its trading day on Friday at an astounding market value of $3 trillion. This outstanding feat crowns the tech titan as the most valuable company in history. The record was achieved when Apple's shares closed at $193.97, up over two percent from the previous day, pushing its market value to a mind-boggling $3.05 trillion. The company etched its name in financial history as the first ever to cross this monumental $3 trillion threshold.
Notably, the road to $3 trillion hasn't been linear for Apple. The company came close to this figure during intraday trading in January 2022 but slipped below the mark by day's end, as per The Associated Press. In the same year, the tech giant experienced a staggering loss of $1 trillion in market value, dropping below the $2 trillion mark in January. Nevertheless, the Cupertino-based company has shown remarkable resilience, with its stocks rebounding and marking an impressive 49 percent rise since the beginning of 2023.
Looking back, Apple was the first US company to break the $1 trillion milestone in 2018 and achieved the $2 trillion landmark in 2020. Now, with a $3 trillion valuation, Apple leaves behind Microsoft as the second most valuable public company at $2.5 trillion and oil behemoth Saudi Aramco, third, at $2.08 trillion.
The notable valuation of Apple coincides with its daring launch of Apple Vision Pro earlier this month and an earnings report in May that exceeded expectations. Although there was a slump in sales and profit, Apple's stock market success this year is a contrast to 2022, when its market cap dipped below $2 trillion, a level not seen since early 2021. Wall Street ended the first half of 2023 on a positive note, with a tech rally leading markets to close higher for the month and the second quarter of the year.
Apple's surge can also be attributed to a broader boom in Big Tech stocks, as investors ride the wave of interest in AI technologies. Companies like Nvidia have witnessed a 190% leap this year, followed by Meta at 138%. This growth has led to the Nasdaq marking its largest first half percentage gain since 1983, an increase of 31.7%.
Despite an economic environment marred by fears of recession, inflation, and high interest rates, Apple's relentless growth contributes significantly to the S&P 500 index, making up over 7.5% of its total value. Now trading at a current earnings multiple and a future earnings multiple of 32, this follows a remarkable 50% increase in Apple's value.
In the first quarter of 2023, Apple reported earnings per share of $1.52 on revenues of $94.84 billion, surpassing analysts' expectations for earnings per share of $1.44 on revenues of $92.94 billion. The accomplishment is more poignant considering that in the previous report, Apple missed analysts' expectations for the first time since 2016. Even in a climate of high interest rate and inflation, Apple continues to deliver.
Apple’s foray into augmented reality (AR) with the Vision Pro signals a new era. Introduced at the company's annual developer conference, these AR glasses combine state-of-the-art technologies and operate through numerous sensors, cameras, and two chips - the M2 chip and a new chip called R1. With a hefty price tag of $3,499, they are set to hit the market in early 2024.
While these glasses aren't yet expected to significantly contribute to Apple's revenues due to their high cost and room for improvement, they mark a pioneering step in AR. Like the iPhone 14 which has evolved light years from the first iPhone, Apple's glasses will undeniably go through the same evolution, pushing the boundaries of what is possible in the AR space.
Despite its extraordinary success, Apple is not immune to potential economic downturns. A potential recession could affect the company significantly, particularly in terms of the launch and adoption of the new AR glasses. But even amidst such concerns, the company is paving its way towards a $3.5 or even $4 trillion valuation. Analyst Dan Ives from Wedbush predicts Apple's annual revenues from services will reach 100 billion dollars next year. So, whether this valuation is reached in the next year or two or more, Apple continues to innovate and lead the advancement of technology, potentially even having more "tricks up its sleeve" to introduce in the coming years.
