Apple once again breaks the $3 trillion mark

Apple’s market value briefly peaked above $3tn in intra-day trading on 3 January 2022, before closing the session just below that mark.

Apple’s market valuation once again crossed the $3 trillion mark after the US tech giant’s shares hit a new record on Friday.

The company’s shares rose about 1 percent to $191.42 in opening trade in New York. Its market value has recovered 45% this year, adding nearly $1 trillion in market value and far outpacing the 14.5% gain for the broader S&P 500. Apple passed $3 trillion for the first time in early 2022.

Under CEO Tim Cook, Apple has become bigger than Alphabet and Amazon combined and has a half-trillion-dollar lead over its closest competitor, Microsoft.

“Investors are positive about the margin expansion seen over the past few years, which has been supported by increased sales of high-end iPhones and strength in services,” said Shannon Cross, an analyst at Credit Suisse.

Apple was the first company to reach a $1 trillion valuation in August 2018, and two years later it became the first company to be valued at $2 trillion.

Apple hit $3 trillion once before, on the first day of trading in 2022. However, the peak proved short-lived and markets later spiraled downward following Russia’s full-scale invasion of Ukraine. At the time, the stock was as high as $182.86 — lower than it is now because there are fewer shares available after extensive buybacks.

Apple shares ended last year down 29%. Revenue was limited in the holiday quarter after the Covid-19 outbreak in supplier Foxconn’s “iPhone city” in Zhengzhou led to shutdowns of production lines and worker protests against tough policy measures.

The tech giant’s latest record is perhaps more significant than its previous peak in January 2022, when the broader S&P 500 was worth more than $40 trillion, up from $36.5 trillion now, according to S&P Dow Jones Indices.

Many companies at the time took advantage of the pandemic-induced work-from-home trends and pushed to unsustainable valuations. The US Federal Reserve has yet to begin its cycle of raising interest rates to fight inflation.

Microsoft shares have also risen nearly 50% this year thanks to market buzz around artificial intelligence, where the company has emerged as a leader after partnering with OpenAI, the startup behind ChatGPT.

The factors behind the sharp rise in Apple’s stock are less obvious, as the company has posted back-to-back quarters of revenue declines — following a streak of 14 quarters of growth. Analysts also forecast full-year revenue this year of $385 billion, down 2.4 percent and only the third decline in 22 years.

But Apple’s long-term potential to return to growth is strong as the iPhone’s market share grows globally, particularly in India and emerging markets where it has only single-digit market share.

“Apple’s $3 trillion market capitalization reflects the company’s long-term focus on continuing to develop and control the key elements of their IP – software, silicon, devices and services with a focus on delivering the best customer experience,” Cross said.

Tom Forte, an analyst at DA Davidson, an investment bank, attributed Apple’s rally to an improvement in its supply chain after China ended its zero-Covid policy last year and investors poured more money into quality stocks after the collapse of Silicon Valley Bank in March.

The new high also comes three weeks after the iPhone maker unveiled a pricey headset that could set the company’s future course beyond the smartphone.

The Vision Pro “spatial computing” headset is considered Apple’s most significant product launch since the iPhone in 2007.

Evercore ISI estimates that Apple could sell 14 million headsets “in the first few years” — a much slower start than the Apple Watch or iPhone. But at a price of $3,500 per unit, the investment bank estimates it could add $19 billion to total revenue within five years.