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AAPL’s Trailblazing Market Capitalization

Apple's stock reached an all-time highest record and a historic milestone, closing at a valuation of US$3 trillion as of Friday (6/30). On top of that, their shares surged by more than 2% at a record of US$193.97 last Friday (6/30). With a total of 15.7 billion shares in circulation, Apple's stock price appreciation has propelled the company's market capitalization to an unprecedented level. Apple's stock barely increased by 0.2% as it closed with a constant high share price for the third straight day last Thursday (06/29). According to Wedbush Securities, there is a significant underestimation by the Street regarding the extensive opportunity for upgrading the massive installed base around the iPhone 14. Furthermore, they anticipate an upcoming mini super cycle with the iPhone 15, as approximately 25% of Apple's golden customer base has refrained from upgrading their iPhones for a period exceeding four years. In spite of a fall in sales and profit, the company's quarterly earnings report back in May this year portrays a more robust performance than was expected beforehand. Additionally, the surge in Apple's stock by 49% can be attributed to the general increase in investor interest towards artificial intelligence in Big Tech stocks throughout the current year. Nonetheless, Apple's success on the stock market this year contrasts sharply with the company's performance in 2022. Moreover, for the very first time since early 2021, Apple's market cap was at a position of less than US$2 trillion at the start of this year.

The skyrocketing valuation of Apple's stock is heavily influenced by the launch of Apple Vision Pro earlier in June and a stronger-than-anticipated quarterly earnings report in May, despite slumping sales and profit. The Vision Pro, an augmented reality device available next year, pleased tech journalists who saw a prototype. However, it is only beginning to gain traction in the mainstream consumer market. For this newest innovation, Apple will be charging its buyers US$3,499 for each Vision Pro. The hefty price of Apple Vision Pro is complemented by advanced technology, which consists of a dual-chip processor, precise eye tracking, spatial audio system, security system, as well as an external battery. As for the battery life of the Vision Pro, it is projected to last about 2 hours with an internal battery capacity of 20,000mAh (74Wh) and total power consumption of about 30W. The increase in market cap demonstrates how investors are still optimistic about the stock and Apple's line-up of goods and services, despite the company's May warning that its current quarter sales were anticipated to decline by around 3%. Apple's performance on the stock market this year contrasts sharply with 2022, with its market cap being below US$2 trillion at the beginning of 2023 for the first time since early 2021. Ultimately, investors view the company as one of the shining examples in a year of industry turmoil, during which tech giants pledged to maximize efficiency and laid off thousands of workers.

The overview of Apple's increase in performance output aligns with the rise of its stock value. Alongside their new invention of the Vision Pro, other vital factors such as the outstanding execution of their business strategy, earnings plan, and even a good hold on their consumer base had positioned Apple as one of the hottest stock picks for investors worldwide. As this, according to a CNBC Analyst, preserving a long-term approach for Apple's stock may be a good option. Opportunities such as Apple's strong market position alongside other competitors and their continuous vision and innovations have made their stock an excellent choice for investment with an adequate expectation of value rise in the future. Investors can also explore options such as call spreads when investing in Apple, which consists of one long call with a lower strike price and one short call with a higher strike price which could maximize their investment strategy. On the other hand, investors should also be alerted to any regulations made by the United States Federal Reserve, as a rise in the interest rate may lead to a potential decrease in the stock market, including Apple itself. Investors should consider market conditions and macroeconomic factors when making investment decisions on Apple stock. The recent rally has surprised strategists, raising concerns due to potential interest-rate hikes by the Federal Reserve. Nonetheless, investors are optimistic about the growth potential of artificial intelligence and are drawn to Apple's strong balance sheet, consistent revenue streams, and competitive advantage.




Wall Street Journal

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