Arab Press

بالشعب و للشعب
Friday, Jun 20, 2025

Is Apple really worth $3 trillion and what's its secret?

Is Apple really worth $3 trillion and what's its secret?

Investors bet the iPhone maker will keep launching best-selling products as it explores new markets such as automated cars and virtual reality.

Apple had a stunning start to 2022 when it briefly became the first company to touch a $3 trillion (€2.6 trillion) market value on Monday before closing the day just short of the mark.

It comes as investors bet the iPhone maker will keep launching best-selling products as it explores new markets such as automated cars and virtual reality.

But is the tech giant really worth $3 trillion (€2.6 trillion) 16 months after becoming the first company valued at $2 trillion (almost €1.8 trillion)?

The answer depends on how one views the iPhone maker's ability to keep up the unprecedented growth of the past 15 years.

In its last fiscal year which ended September 25, Apple delivered 33 per cent revenue growth to $365.8 billion (€323 billion) thanks to strong demand for 5G iPhone upgrades.

But that growth spurt came after a year of single-digit sales growth and the 2019 fiscal year when Apple's sales declined.

Apple's new technologies


The bull case for Apple is that it has built an ecosystem of a billion iPhone owners who spend money on services and that it is well-positioned for future categories like self-driving cars and augmented reality.

The deep discount investors once ascribed to Apple's stock because of its dependence on the iPhone for sales growth has disappeared as Apple has proved that the device sits at the centre of an expanding solar system that adds new gadgets like the Apple Watch and Apple AirTags and new, paid services like television and fitness classes.

"Apple has been and still is an incredible growth story anchored by must-have products and a growing portfolio of services. While years ago the stock price was a value investor's dream, I don’t think the current near-record high price should be a sell signal for long-term focused investors," said Trip Miller, managing partner at Gullane Capital Partners.

Moreover, Apple is trading at about 30 times its expected 12-month earnings, down a bit from a multiple of 32 in early 2021 but still at highs not seen since 2008, according to Refinitiv data.

Hal Eddins, chief economist at Apple shareholder Capital Investment Counsel, said Apple has been a "safety stock" through the pandemic and that investors are likely expecting solid holiday sales.

Apple car


Apple "seems to be vaccinated against anything that Omicron can throw at it," Eddins said. "I’m not complacent at this level, but there would have to be some nasty unforeseen events to rock the boat".

Some analysts believe Apple has plenty of room to grow in the coming years, with future products such as the Apple Car.

"We see the prospects of Apple Car - representing the clearest path to doubling Apple's revenue and market cap - catalysing a shift in investor narrative back toward the attractiveness of the platform (1 billion loyal customers) and long-term, sustainable growth," Morgan Stanley analyst Katy L Huberty wrote in November.

No Guarantees


The bear case, however, is that Apple is hitting the limits of how much it can grow its user base and how much cash it can squeeze from each user, with no guarantees that future product categories will prove as lucrative as the iPhone.

In a December note to investors, Bernstein analyst Toni Sacconaghi warned that Apple's prospects in the augmented and virtual reality category are bright but likely to account for only 4 per cent of its revenue by 2030.

Moreover, the entire market for those devices is not likely to be near the billion-unit mark until 2040, he wrote.

Sacconaghi also saw "no obvious catalysts for multiple expansion" in Apple's stock "given slower expected growth" in the next fiscal year. He has a market perform rating on the stock.

Another concern is uncertainty over Apple's ability to lock in the same profits for paid services on its future hardware. Its App Store business model, which takes commissions on in-app purchases of digital goods, has been targeted by proposed legislation in the United States and Europe.

To be sure, one of the primary drivers of Apple's ballooning valuation is the goal it set in 2018 to get what at the time was nearly $100 billion (€88 billion) in net cash off its balance sheet and become net-cash neutral.

That goal, for which Apple never specified a deadline, has been tough to meet because it simply keeps making money. Apple generated $104 billion (around €92 billion) in cash from operations in fiscal 2021 and returned $106.5 billion ( (almost €94 billion) to shareholders. But its net cash remained at $66 billion (€58 billion) at the fiscal year's end.

With big acquisitions largely out of the question under current US antitrust regulators, Apple has had few options but to shovel cash back to shareholders, said Tom Plumb, founder of Wisconsin Capital Management and an Apple shareholder.

"They're fighting the fact they've got $100 billion [€88.5 billion] of cash flow a year," Plumb said. "You can't bet against a company that has this type of cash flow".

Newsletter

Related Articles

Arab Press
0:00
0:00
Close
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
G7 Leaders Fail to Reach Consensus on Key Global Issues
Mass exodus in Tehran as millions try to flee following Trump’s evacuation order
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Netanyahu Signals Potential Regime Change in Iran
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
Iran Conducts Ballistic Missile Launches Amid Heightened Tensions with Israel
Iran Signals Openness to Nuclear Negotiations Amid Ongoing Regional Tensions
Shock Within Iran’s Leadership: Khamenei’s Failed Plan to Launch 1,000 Missiles Against Israel
UK Deploys Jets to Middle East Amid Rising Tensions
Exiled Iranian Prince Reza Pahlavi Urges Overthrow of Khamenei Regime
Wreck of $17 Billion San José Galleon Identified Off Colombia After 300 Years
Iran Launches Extensive Missile Attack on Israel Following Israeli Strikes on Nuclear Sites
Israel Issues Ultimatum to Iran Over Potential Retaliation and Nuclear Facilities
Coinbase CEO Warns Bitcoin Could Supplant US Dollar Amid Mounting National Debt
Trump to Iran: Make a Deal — Sign or Die
Operation "Like a Lion": Israel Strikes Iran in Unprecedented Offensive
Israel Launches 'Operation Rising Lion' Targeting Iranian Nuclear and Military Sites
Israeli Forces Intercept Gaza-Bound Aid Vessel Carrying Greta Thunberg
IMF Warns of Severe Global Trade War Impacts on Emerging Markets
Syria to Reconnect to Global Economy After 14 Years of Isolation
Saudi Arabia Faces Uncertainty Over Succession After Mohammed bin Salman
Israel Confirms Arming Gaza Clan to Counter Hamas Influence
Majority of French Voters View Macron's Presidency as a Failure
U.S. Reduces Military Presence in Syria
Trump Demands Iran End All Uranium Enrichment in Nuclear Talks
Iran Warns Europe Against Politicizing UN Nuclear Report
Businessman Mauled by Lion at Luxury Namibian Lodge
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
European and Arab Ministers Convene in Madrid to Address Gaza Conflict
Head of Gaza Aid Group Resigns Amid Humanitarian Concerns
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
×