Apple comes close to hitting $3 trillion USD market cap

On Monday (December 13th), Apple Inc's (AAPL) market valuation was just shy of $3 trillion, following a spectacular run over the last decade that has elevated it to the status of the world's most valuable business.

On Monday, the company's shares slid slightly over 2% to settle at $175.74, reversing earlier advances that saw it near the $182.86 price needed to reach a market value of $3 trillion.

Last week, Apple's stock jumped by 11%, extending its year-to-date rise of more than 30%, as investors remain confident that wealthy customers will continue to pay top price for iPhones, MacBooks, and services like Apple TV and Apple Music.

The iPhone maker led a group of mega-cap tech companies including Google’s parent company Alphabet Inc (GOOG) and Amazon.com Inc (AMZN) that benefitted from consumers and businesses depending extensively on technology during the pandemic, rising from $2 trillion to near $3 trillion in market value in 16 months.

In contrast, Apple took two years to go from $1 trillion to $2 trillion in market capitalization.

"It's now one of the more richly valued companies in the market, which shows the dominance of U.S. technology in the world and how confident investors are that it will remain in Apple’s hands," said Brian Frank, a portfolio manager at Frank Capital who sold his long-standing position in Apple in 2019 as the stock's valuation rose. "It seems like the stock has priced in every possible good outcome.”

According to Daniel Morgan, senior portfolio manager at Synovus Trust Company, new revenue lines that investors expect include a possible Apple Car, as well as growth in service categories such as apps and TV, which are still well below the 65 percent of the company's revenues generated by iPhone sales. Over the last decade, Tim Cook has done an incredible job, bringing Apple's share price up over 1,400 percent," said OANDA analyst Edward Moya.

Chief Executive Tim Cook, who took over after Steve Jobs quit in 2011 and overseen the company's expansion into new products and markets, would be ecstatic to surpass the $3 trillion barrier.

Since the 1990s, Apple shares have gained 22 percent each year, whereas the S&P 500 (.SPX) has only returned less than 9% per year.

If Apple surpasses the $3 trillion mark, Microsoft Corp (MSFT) will be the lone business in the $2 trillion club, with Alphabet (GOOGL), Amazon (AMZN), and Tesla Inc (TSLA) having already surpassed the $1 trillion mark.

Microsoft, with a market capitalization of $2.6 trillion, was the most valuable corporation in the world until late October, when Apple warned that supply chain issues could stymie its growth for the rest of the year.

As firms transitioned to a hybrid work paradigm and consumers upgraded their gadgets, large technology stocks have surged this year, with investors tapping increased demand for cloud-based products. The Nasdaq 100 (NDX), which is dominated by huge corporations like Apple, is up over 26% this year, while the S&P 500 index is up roughly 24%.

As the global economy recovers from the coronavirus epidemic and supply chain pressures lessen, emerging technologies such as 5G, augmented reality/virtual reality, and artificial intelligence may help Apple and other cash-rich major technology stocks remain popular with investors.

"I am in the camp that are experiencing another 'Super Cycle' with the iPhone 12/iPhone 13 franchise," wrote Daniel Morgan, senior portfolio manager Synovus Trust Company, in a note. "And that AAPL is lifting off to another string of quarters with strong revenue and profit growth."

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