Apple Inc. (NASDAQ: AAPL) has achieved a groundbreaking feat on Wall Street, crossing the remarkable $3 trillion market value threshold. This achievement is a testament to the unrelenting dominance of mega-cap tech giants in the equity markets, demonstrating their unstoppable momentum.
With a 2.3% surge on Friday, the iPhone maker continues to forge ahead, propelling its market size by an astounding $983 billion this year alone. This places Apple firmly ahead, towering over Microsoft (NASDAQ: MSFT) by half a trillion dollars. Apple’s momentous ascent to this milestone has propelled the NASDAQ 100 Index to its best-ever first half and ignited a broader stock rally, underscoring the absolute supremacy of tech mega-caps.
The sheer force of this tech rally has caught many strategists off guard, prompting scepticism about its sustainability in the face of potential Federal Reserve interest-rate hikes and economic uncertainties. However, investors remain buoyed by the immense growth potential of artificial intelligence while drawn to Apple’s qualities: an impressive balance sheet, resilient revenue streams, and an unwavering competitive edge.
Notably, Wall Street’s unyielding optimism toward Apple is exemplified by Citi’s recent initiation of coverage with a buy rating, highlighting the underappreciated potential for Apple to expand its margins amidst predictions for an additional upside of approximately 30% for the stock, which would propel Apple close to a $4 trillion valuation.
In 2011, when Apple’s market cap was under $340 billion, it initially claimed the title of the world’s most valuable stock, accounting for around 3.3% of the S&P 500. Since then, it has rarely relinquished this position, achieving the $1 trillion valuation milestone in mid-2018 and reaching $2 trillion in August 2020, becoming the first US company to surpass that milestone. In early 2022, Apple momentarily surpassed the $3 trillion mark but failed to close above it, with that peak marking the beginning of a subsequent downtrend accompanied by rising interest rates to combat soaring inflation.
Companies of such magnitude are a rarity, and in the US, this exclusive club is populated solely by other mega-cap technology stocks, such as Alphabet (NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), and chipmaker Nvidia (NASDAQ: NVDA), which became the first trillion-dollar chipmaker earlier this year. Microsoft is the only other US stock with a valuation exceeding $2 trillion. Apple’s enormous size grants its substantial influence over the markets, accounting for a weighty 7.7% of the S&P 500 Index. Apple’s stock trades at around 30 times forward earnings, a decline from its peak in 2020 but still significantly higher than its 10-year average multiple of 17.9.
As Apple’s journey reaches unprecedented heights with a soaring market value, the tech titan continues to commandeer the future, leaving an indelible mark of innovation and investment. Apple’s relentless rise has captivated the world with its boundless potential and unwavering grip on the global stage, but will the rally sustain?
Sources: Bloomberg, Business Live, Reuters
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