Beautiful Virgin Islands

Tuesday, Jun 24, 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

Beautiful Virgin Islands
0:00
0:00
Close
“You Have 12 Hours to Flee”: Israeli Threat Campaign Targets Surviving Iranian Officials
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Airlines Evaluate Flight Cancellations Amid Escalating US-Iran Tensions
Starmer Invites Innovators to Join Government Talent Scheme
UK Economy’s Strong Opening Quarter Shows Signs of Cooling
Harrods Seeks Court Order to Secure Al Fayed Estate for Victims
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
WATCH: Israeli forces show the aftermath of a massive airstrike at Iran's Isfahan nuclear site
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
BBC Demands Perplexity AI Immediately Stop Using Its Content
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
Political Turmoil Resurfaces in Belgium Amid Economic Concerns
Fed policymakers divided on timing of interest rate cuts
Trump signals imminent agreement with Harvard University
Inheritance tax referendum alarms Swiss billionaire community
Japan cancels bilateral security meeting amid US defence demands
AI skeptic Emily Bender warns that ‘the emperor has no clothes’
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
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
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
×