Apple’s Path to Sustaining $3 Trillion Market Value


The Gist

  • Cash strategy. Apple’s massive cash reserves distinguish it from tech peers.
  • Promising forecast. Apple’s iPhone and services strength fuel anticipated growth.
  • Market impact. Apple’s performance critically influences overall market health.

When Apple scooted past the $3 trillion mark for the second time in its history last Friday, it did so under some incredible circumstances. The company had seen sales declines for two straight quarters with another anticipated on the way. It posted an earnings miss for the first time in almost seven years in February. And its highly anticipated product — the Vision Pro — isn’t scheduled to hit stores until 2024 and still feels like a prototype.

Apple’s Resilience Proves Promising as It Reaches $3 Trillion

Yet while it seems like Apple shouldn’t be setting all-time stock market highs, and shouldn’t be up 53% this year, the company is much better positioned to remain at the $3 trillion level than when it first reached it, briefly, in early 2022. With a whole lot of cash, a little financial manipulation, and a growing services business, Apple’s thrived in a period of rising interest rates. And now that the worst of a tough economic moment is likely behind it, it’s set to flourish in the rebound ahead. 

Of all the factors that played a role in Apple’s surge, cash may be the most important. When interest rates rose from zero to more than 5%, profits suddenly mattered more than promise, and Apple collected plenty of the former. The company built a formidable war chest, amassing more than $100 billion in cash, and deployed it masterfully. In May, it announced a $90 billion share buyback, its second in two years, putting that money in its investors’ hands. Apple’s buybacks have distinguished it from many of its tech peers who’ve struggled with profitability. 

Related Article: How Apple’s New Privacy Measures Are Reshaping the Ways Brands Protect Customer Data

Apple Anticipates 30% Climb With iPhone & Services

Taking Apple’s cash into consideration, portfolio manager Patrick Burton told Bloomberg the company’s valuation made sense. “In my career, I never envisioned a company of this size,” he said. “But then I never envisioned a company capable of generating more than $100 billion in free cash flow in a year.” On Thursday, Citi analyst Atif Malik set a $240 price target for Apple, anticipating another near 30% climb.


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