Apple Inc., headquartered in Cupertino, California, is a multinational technology
company that employs approximately 200,000 people. The company’s market cap
surpasses that of many countries, and its POWR Ratings reflect a promising outlook.
AAPL's market cap surpasses the GDP of most countries
Apple, the American hardware manufacturer, has become the world’s most valuable company. Its total market cap is more than $1 trillion, surpassing the GDP of many countries. This is a huge achievement and one that has taken the company 38 years to reach. The company’s CEO, Steve Jobs, was Apple’s co-founder.
While the company’s stock price has been on an upward trend since 2007, Apple has yet to surpass $3 trillion in value. It’s possible the stock will hit that mark in the next 12 to 18 months. The company’s stock is currently trading at nearly $470 a share. Interestingly, the market cap of the tech giant is larger than the economy of Canada, which is the third largest country in the world by population. However, the company’s total market cap is less than one-fourth of the economy of China.
If the company continued to grow as it is today, it would be worth $5 trillion. It would be the eighth richest country in the world, and the richest corporation in the world. In addition to being the wealthiest company in the world, Apple’s total market cap is greater than the economies of seven other countries. The United Kingdom, France, Russia, Brazil, India, and Mexico have higher GDPs than the company’s.
The company also has the largest cash reserves of all the Indian IT players combined. It is valued at $1.5 trillion by Wall Street. It has billions of dollars in revenue and earns $151 billion in profit daily. It directly contributes to 2 million jobs. The technology company has a chance to reach a new record, the $5 trillion market cap. This could happen as soon as the fourth quarter of 2022. The International Monetary Fund predicts that Apple will grow faster than the global economy in 2022.
Apple’s market cap exceeds the GDP of some of the biggest cities in the United States. Los Angeles, for example, had a real GDP of $832 billion last year. The city’s total market cap is almost double that of the company. It is also the only American city that has a lower market cap than the total value of Apple.
AAPL generates profit from its equity
Aside from their boffo iPhone ota and other gimmicks, Apple is also big on free cash flow. Indeed, their latest fiscal year results have them tucking away a nice little buck under the mattress. Moreover, the company’s longstanding corporate culture of being agnostic to their employee’s preferences, if not their credit card bills, is refreshingly refreshing. While the company’s stock price swooped downward in the wake of its aforementioned recent woes, its balance sheet is still in stellar shape. For a company that isn’t exactly known for being particularly slick, it should come as no surprise that Apple has garnered the dubious title of most innovative company of the year, with no less than six such accolades to boot. From its enviable trove of intellectual property to its exemplary product safety record, it’s no wonder the company is considered to be one of the world’s most well rounded companies. This said, the company’s newest crop of managers aren’t exactly wowed with their current state of affairs.
AAPL's valuation is enticing
AAPL’s valuation is enticing to say the least. If you are interested in making an informed investment, you will want to look beyond the hype surrounding the Cupertino juggernaut’s stock price. The most important part of a stock’s valuation is its growth prospects. In addition to earning a healthy dividend, Apple has the potential to boost its earnings further by embarking on a share repurchase program. This is not to say that Apple is free of risk. The company faces supply constraints related to Covid restrictions in China. It also has the potential to face margin pressure from 5G phones. Its competitiveness against Samsung will also be tested. Luckily, Apple has a seasoned team of managers and investors that can navigate the challenges that lay ahead.
While it’s difficult to predict the company’s future growth, a cursory review of its supply chain indicates that it’s not hard to see why it’s valued at a record high. Its supplier base includes 471 key players from 22 different countries. And while its stock market cap is staggering, it’s still dwarfed by its competitors.
While the hype around the company’s new augmented reality products is undoubtedly real, the company hasn’t yet fully launched its newest product. As a result, analysts estimate that it will take at least one year for the technology to see widespread adoption. A few of the biggest hurdles include the cost of manufacturing the devices, as well as the challenge of re-branding and re-marketing.
The company is also facing the potential of a COVID recession in the US. As well, the potential for a wechat ban or geopolitical tensions in the region could have a negative impact on AAPL’s business model. That’s not to mention the specter of an unimpressive global sales performance. However, it’s also worth noting that it’s not the only company facing these challenges.
For example, NVIDIA is expected to see 17% EPS growth next year. Broadcom’s P/E is a tad lower, but it still ranks above Apple. And as for the other big tech companies, Adobe and Alphabet are both expected to post annual EPS growth of 5% or more. While you may not see a stock market rally as strong as those enjoyed by some of its competitors, you can expect an upward trajectory as the underlying market regains its footing