Apple became the first company to reach a market cap of $3 trillion (BRL 17 trillion), after its value soared by $1 trillion in less than 16 months as the coronavirus pandemic powered big techs. .
The iPhone maker became a $1 trillion company in August 2018, and two years later it was the first company valued at $2 trillion. This Monday (3), its shares rose 3% to more than US$182.86 (R$1,036.82), taking it to a new level.
Apple briefly lost its title as the world’s most valuable company to Microsoft in late October of last year. However, a strong recovery in November restored its crown. It rose the most towards the end of 2021, and added $500 billion (R$2.8 trillion) to its market value since 15 November.
Only a few companies are currently valued at more than $1 trillion, including Tesla and Amazon. Google’s parent company Alphabet and oil giant Saudi Aramco are each worth about $2 trillion. Microsoft’s market cap is still around $2.5 trillion, given its size when it surpassed Apple in market capitalization last year.
Apple shares rose more than 30% in 2021, when the company deftly handled the supply chain crisis and benefited from extra demand during the pandemic for iPhones, Macs and iPads among office workers who modernized their home offices.
The stock jumped in early December after Morgan Stanley analysts raised its 12-month price target to $200 (R$1,126), saying its likely augmented and virtual reality devices have not yet been fully priced.
Moody’s also upgraded Apple to AAA in December, making it the third company in the world with this rating by the agency, along with Microsoft and Johnson & Johnson. S&P Global still gives Apple AA+, one grade below AAA.
Tom Forte, an analyst at DA Davidson, said investor enthusiasm for Tesla and electric vehicles is also influencing Apple’s action, in hopes that the iPhone maker will enter the car industry in the next five years.
There was also strong activity around Apple in the derivatives markets, as brokers were betting the stock would continue to rally.
Apple’s market value has now grown to nearly $2.7 trillion ($15.3 trillion) in a decade under Tim Cook’s leadership, a fact that has surprised critics who questioned its credentials after he took over from Steve. Jobs.
Cook’s success has since grown, with his ability to manage supply chains behind the scenes, scale products and avoid political threats in Washington, Brussels and Beijing.
“Cook was considered a safe bet, but very conservative,” said Ben Wood, chief analyst at CCS Insight. “But what he delivered was just astonishing. He made the iPhone franchise the most profitable piece of electronics industry in history.”
Morgan Stanley analyst Katy Huberty commented that Apple’s share price has risen about 500% in the past five years alone, outpacing the S&P 500, which has gained about 105% in the same period.
As a result, Apple now trades at a historically high price-to-yield ratio of over 30, against a three-year average of 23.4, according to DA Davidson.
But few analysts believe the stock is in bubble territory. Of the 45 analysts covering Apple, 35 rate it a “buy” and two a “sell,” according to Bloomberg.
The aggressive forecast reflects how Apple was re-evaluated by Wall Street to take into account its growing, high-margin services business, which delivered recurring revenues and cut its reliance on iPhone switch cycles.
Apple, which had revenues of more than $1 billion a day in the financial year ending September, now has 745 million subscribers to a range of growing services, including streaming music, video and fitness “on demand” and warranty coverage.
Last year its services sector accounted for nearly $70 billion (R$397 billion) in revenue, double that of four years ago. The unit’s margins last quarter hit a record high of 70.5%, more than double its margin on hardware sales, according to Evercore ISI.
Among the biggest risks for Apple and its share price is that the pillars of its services business will be disrupted by policy changes. Lawmakers in Washington have raised questions about the estimated annual payout of $8 billion to $12 billion (BRL 45 billion and BRL 67.5 billion) that Alphabet gives annually to have Google Search standard on its devices, while many others targeted the App Store’s business model of charging 15% to 30% commission on some transactions.
So far, Apple has been relatively unscathed. In the United States, Epic Games sued Apple last year for allegedly operating an illegal monopoly, but Epic lost nine out of ten counts. When Apple appealed the one that lost, a higher court accepted its request and postponed the lower one’s order to open the App Store for rival payment platforms.
Meanwhile, Apple has also diversified its hardware offerings substantially, into accessories like Airpod, Apple Watch and others.
Huberty commented that Wearables almost didn’t exist in 2014, but today “they’re a $38 billion business — the size of a Fortune 120 company.”
(Joe Rennison and Eric Platt collaborated)
Translated by Luiz Roberto M. Gonçalves