Apple came within reach of a $3 trillion market capitalization today (Dec. 13), a marker no publicly traded company has ever touched before.
Long considered one of the safest tech stocks to invest in, Apple has weathered the pandemic better than many of its competitors thanks in part to its strong cash flow. With new projects on the horizon, some analysts believe its capitalization is likely to climb past $3 trillion by next year, if not sooner.
Apple stock rose by 0.9% in trading this morning, but closed down 2.1%, at $175.74 per share. Talk of the $3 trillion mark came as JPMorgan updated its target share price for the company from $180 to $210, citing improved expectations around demand for the iPhone 13. Apple told suppliers earlier this month demand for the new phone had weakened, but iPhone sales in China were up by more than 6% in November compared to the previous year, boosting analysts’ confidence in the stock. In a note, JPMorgan analysts wrote they believed Apple’s stock was undervalued, and that the company’s upcoming iPhone with 5G technology has the potential to convert more than 1 billion Android users.
Why Apple’s stock withstood pandemic shocks
Excitement surrounding a number of new products, coupled with consistent cash flow, has helped Apple withstand pandemic-related disruptions. When the stock market fell on Nov. 30 amid omicron variant fears, major tech stocks, including Google, Amazon, and Meta, all closed down for the day, but Apple’s stock was up 3.1%.
Apple’s cash flow is expected to be at least $100 billion a year for the next decade, which will likely pay off for shareholders. Since 1990 Apple, shares have returned 22,000%, according to Bloomberg, equivalent to about 28% a year.
Declining interest in other types of investments may be contributing to Apple’s popularity as well. Bond buying has dwindled over the past year as interest rates remain low; at the same time, Apple now tends to outperform such investments. In November, for example, Apple stock had returns of 5.6% while BlackRock’s US government bond exchange-traded fund (ETF) reported returns of just 1.17%.
New projects on the horizon for Apple
While Apple didn’t hit the $3 trillion market cap today, its share price remains 200% percent higher than it was prior to the pandemic. The company plans to release computerized glasses featuring augmented reality technology in 2022, and is developing a virtual reality headset as well. Apple is also working on a self-driving electric vehicle that could be on the market as soon as 2025.
Such products could help boost Apple’s share price by $20, Daniel Ives, the research managing director for financial services firm Wedbush Securities, told Bloomberg.
Apple’s competitors aren’t far behind the $3 trillion mark, though. Microsoft currently trails the company in market capitalization, and even surpassed Apple for a time this October as the tech company struggled to combat supply-chain issues.