Apple
shares pushed past the $3 trillion level on Tuesday for the first time since early August.
Apple remains the most highly valued U.S. listed company, about $235 billion ahead of
Microsoft.
Just three other U.S. companies have a valuation above $1 trillion:
Alphabet,
Amazon,
and
Nvidia.
In fact, Apple’s valuation is about even with Amazon and Alphabet combined.
Shares of the iPhone parent on Tuesday rallied 2%. 2 to $193.50, the stock’s highest close since Aug. 1. The stock topped the $3 trillion level for the first time since Aug. 3, according to Dow Jones Market Data. Apple hit that mark for the first time on June 30.
The stock needed to close at $192.89 to reach the $3 trillion milestone.
Apple’s recent run—the stock has rallied 9% since reporting earnings in early November—comes despite a distinct lull in its underlying business.
September quarter revenue was down 1% year over year, the fourth straight quarterly decline at the top line. While iPhone revenue inched up 3% in the latest quarter, Mac revenue plunged 34%, and iPad revenue fell 10%.
Services revenue improved 16%, offsetting the weakness in most hardware categories. Apple projected December-quarter revenue would be about flat with the year- earlier period, falling short of the Wall Street forecast for 5% growth.
While Apple shares have obviously had a strong year—up nearly 50%— the stock is actually lagging behind most of the other “Magnificent 7” group of tech shares.
Nvidia shares have more than tripled this year on huge demand for graphics processors used in generative AI applications and while
Meta
has rallied 160%, aided by the company’s “year of efficiency” push to cut costs and boost margins.
Heading into 2024, Apple investors will be focused on the growth in iPhone demand, particularly given intensifying competition in the China market, where Huawei is getting new traction, and on the continued growth of the company’s services arm.
One wild card on that front will be the Justice Department’s lawsuit against Google, which asserts that the company unfairly locked in its dominant position by paying billions every year to Apple to lock-in a position as the default search engine both for iPhones and for the Safari web browser. Aa loss for Google in that case could leave Apple scrambling to replace billions in revenue.
Meanwhile, Apple in 2024 will launch its Vision Pro mixed-reality headset, its first product in a category that has seen disappointing results from other entrants, including Meta and Microsoft.
Investors also await clarity from Apple on its strategy around generative AI. While the company has said it is investing in AI, there have been announcements of product plans.
The run-up in Apple shares have driven up the company’s valuation to levels that some investors might find uncomfortable, given the company’s lack of growth recently.
Apple shares now trade for more than 29 times Street consensus estimates for the September 2024 fiscal year. That’s considerably above the current valuations for Microsoft at 24 times, Alphabet at 23 times, and Meta at 22 times.
Commentary from BofA Securities analyst Wamsi Mohan might be helping to push shares higher onTuesday. Mohan, who rates the stock as Neutral with a $208 price target, wrote in a research note that Apple’s App Store revenue is up about 11% in the fiscal first quarter to date, according to SensorTower data.
“For the month of November, App store revenue in China increased 8% y/y after increasing 10% y/y in October,” Mohan said. “Given September media reports about a ban on iPhones at govt locations in China, the strong September, October, and November app store data is promising for Apple.”
Despite this positive data, Mohan maintained his Neutral rating. He said positive catalysts of new product introductions and stable iPhones are offset by a potentially weaker consumer spending environment.
Write to Eric J. Savitz at [email protected] and Angela Palumbo at [email protected]
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