Apple has become the first company in history to reach a value of $3 trillion. But is this new milestone really all about Apple?

Apple has a total market cap of $3 trillion. This number is not just about Apple, but rather the entire stock market and economy as a whole.

Apple at $3 Trillion Isn’t All About Apple

Apple-at-3-Trillion-Isnt-All-About-Apple

Apple’s headquarters are located in Cupertino, California. On a price/earnings ratio, the company’s stock presently trades at a 42 percent premium to the S&P 500.

Getty Images/Tayfun Coskun/Anadolu Agency

Apple Inc. AAPL 2.50 percent is now valued $1 trillion more than it was nine months ago, but the company’s prospects haven’t improved much.

On Monday, Apple, the maker of the iPhone, AirPods, and “Ted Lasso,” became the first corporation to reach a market worth of $3 trillion. While Apple is the only company in the 13-digit club, Microsoft, Alphabet Inc.’s parent company Google, Amazon.com, Tesla, and Saudi Aramco all trade above that level, with Facebook parent Meta Platforms on the verge of joining them.

That alone tells a lot about the forces that are driving Apple’s and many of its other large tech rivals’ stock prices these days. Trillion-dollar values for companies whose goods and services are now at the center of modern life—while reliably generating billions in operating earnings—don’t seem so remarkable in a market of meme stocks, NFTs, and electric-vehicle makers worth more than $80 billion before shipping their first car. Overall, investors have taken on greater risk; the S&P 500 and Nasdaq Composite are currently trading at 17 percent and 23% over their respective five-year average multiples of projected earnings, respectively.

Apple’s quick climb, on the other hand, cannot be entirely attributable to market froth. Apple currently trades at a 42 percent premium to the S&P 500, compared to the S&P 500’s five-year average premium of just 4%. Investors who are betting on the firm to create the next big thing are excited about rumors of future items such as augmented reality glasses and perhaps an electric automobile. The latter, in particular, seems to be a long way off, if it ever comes. Much of Apple’s increased R&D investment in recent years has gone into more internal projects, such as building proprietary CPUs for its gadgets. Such efforts may undoubtedly result in more attractive products—newest Apple’s Macs powered by its own CPUs have been a huge success—but they won’t change the company’s fortunes dramatically.

Meanwhile, Apple confronts the near-term difficulty of operating in a cyclical industry with lengthier product cycles. Apple’s fiscal year finished in September with sales up 33% to a record $365.8 billion and operating income up 64% to $108.9 billion, making it the company’s best ever. That was amazing for such a large firm, but it was the first time in three years that the company had grown by double digits. Despite good sales across the board for Apple’s products and services, the iPhone still accounts for more than half of the company’s income. Furthermore, hefty price subsidies from cellular carriers eager to bring more 5G devices into users aided sales of its flagship smartphone significantly.

Those dynamics aren’t going to last. According to Visible Alpha’s average forecasts, analysts predict iPhone unit sales to climb by just 1% this fiscal year, compared to 24% last year. Apple’s sales are expected to expand by just 5% yearly on average over the next three years, according to FactSet analysts. Amazon, which produces 25% more revenue than Apple despite being valued at $1.3 trillion less, is expected to expand at a rate of 16 percent per year over the next three years, the slowest of the five major US tech companies.

Regrettably, $3 trillion does not purchase as much as it formerly did.

When Apple started selling a $19 polishing cloth, it made waves on the internet. However, it’s not the only Apple add-on available for that amount. Dalvin Brown of the Wall Street Journal explains why. Rafael Garcia’s illustration

Dow Jones & Company, Inc. All Rights Reserved. Copyright 2022 Dow Jones & Company, Inc. 87990cbe856818d5eddac44c7b1cdeb8

The print issue of the January 4, 2022, was published.

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The “microsoft market cap 2021” is a statistic that shows the total value of all Microsoft Corporation shares. The company has a market capitalization of $3 trillion, which makes it the most valuable company in the world.

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