A few more bites out of Apple’s (AAPL) stock by investors, and we may find the tech giant’s market cap beyond the $3 trillion level.
Shares of the iPhone maker have surged 35% year to date, out-performing the S&P 500 pedestrian’s 9% gain. Apple is the fourth-best performing component of the closely tracked FAANG (Facebook, Apple, Amazon, Netflix, Google) complex, lagging the 105% gain in Meta (META), 41% increase in Alphabet (GOOG, GOOGL), and 39% appreciation in Amazon (AMZN).
In the process of its push higher, Apple has added about $690 billion in market cap. The company’s stock market valuation now stands at $2.74 trillion, according to Yahoo Finance data, only 9% away from the $3 trillion mark.
Apple is the highest-valued company in the stock market, with Microsoft (MSFT) a close second, sporting a $2.38 trillion market cap.
Pros point to several reasons behind the impressive run in Apple’s stock.
First, Apple continues to have a great story to tell investors on multiple fronts.
“For Apple there is massive installed base momentum going to the iPhone 15 anniversary cycle, and it has put a tailwind in the stock coupled by demand being solid in the field,” Wedbush analyst Dan Ives tells Yahoo Finance.
That installed base momentum could be stoked further at the company’s 2023 Worldwide Developers Conference, which kicks off June 5.
Apple is widely anticipated to introduce the iOS 17 operating system. But some Apple watchers are holding out hope the company finally unveils its new AR/VR headset that has been in the works for years.
Meantime, Apple’s latest quarterly results – while not perfect – have been viewed favorably by investors looking for relative safety amid the debt ceiling drama and sticky inflation.
“Overall, the results [from Apple] and guidance are exactly what investors were looking for from the company to feel reassured of its defensive positioning and at the same time the greater resilience of Big Tech in general in the current macro as well as on potential further macro deterioration, making it palpable to still keep paying 26x near-term earnings for Apple shares,” said JP Morgan analyst Samik Chatterjee in a client note.
Chatterjee added: “While we can see some investors squirm about a 26x earnings multiple, we believe the resilience of the business proving out in the numbers currently as well as the early part of the pandemic (2020) will amply justify the reasons to pay a premium.”
Another vote of confidence from a special investor has helped sentiment on Apple, too.
Billionaire investor and Berkshire Hathaway CEO Warren Buffett said earlier this month he purchased more shares of Apple. Berkshire now owns a $151 billion stake in Apple, up from $1 billion in May 2016.
Berkshire is Apple’s third-largest institutional shareholder, behind BlackRock (second) and Vanguard (one), according to Yahoo Finance data.
“Apple is different than the other businesses we own. It just happens to be a better business,” Buffett said at the Berkshire Hathaway annual meeting earlier in May.
As for what could trip up Apple’s stock, pros find it hard to come up with a major selling event. Many highlight China’s economic recovery stalling as a key risk to Apple’s stock price in 2023, however.
Said Ives: “Outside of the usual black swan events, the biggest risk to Apple’s stock is around the demand environment in China taking a step down. China is the hearts and lungs of the Apple growth story and so far so good, but that is the biggest risk for the stock.”