Possibility of One Trillion Dollars Market Cap for Apple

Apple Inc.

Apple Inc.

One trillion dollars! A one with twelve zeroes is the market cap for Apple, Piper Jaffray, analyst Gene Munster, thinks Apple could have by 2012. Piper Jaffray has been trying to compare it with the relatively pedestrian $586 billion at which it currently stands.

In a note Monday, the forecast included Munster calling for a 1,000 dollar stock price in the next year-plus and was built on a number of assumptions that don’t seem particularly ridiculous. Munster believes some of the added value will be drawn off the market caps of competitors like Sony, Nokia and BlackBerry-maker Research In Motion, among others, with the rest of the things coming from further innovation from Apple, the iPhone and iPad maker.

It has been noted that 33 million iPhone were sold in the March quarter to be reported April 24, which was up 10% from Munster’s previous forecast. Piper Jaffray expects more growth ahead, as devotees continue to show commitment to the device and the appetite for upgrades to newer models. The fall survey of the firm showed 94 percent of iPhone users plan to stick with the platform for their next smartphone.

Apple shares are already pricing in blockbuster earnings

There have still been a few concerns that Apple shares are already pricing in blockbuster earnings, and merely solid results will not be enough.

The assumption that Munster has made a price target of $910 in one year is 18.6 times his fiscal 2013 earnings forecast of $48.90, richer than the current value being ascribed to Apple shares, but not exactly record-breaking. That is not to say such an event is coming anytime soon. Raich says, “There is no reason to think there isn’t more room to run higher, if it keeps beating and raising guidance”.

Nick Raich, director of research at Key Private Bank, says “Key Private Bank has reduced its view on Apple to market weight, taking some chips off the table”. While the short-term may show few roadblocks, the big-picture concern is whether its assembly line of innovative new products falters without Steve Jobs, and competitors catch up. Raich also says, “The moment it can’t be 1-2 years ahead of competitors, it will be commoditized and margins will be killed if it competes on price”.

Growing nature of Apple

Something else to watch is the growing nature of Apple as a proxy to beat the broader market, Raich warns. The stock is approaching a 5% weighting in the S&P 500, sitting at 4.5% Tuesday, according to Standard & Poor’s, well ahead of the next largest Exxon Mobil 3.2%, Microsoft 1.9%, IBM 1.9%, Chevron 1.7% and General Electric 1.7%. Conventional wisdom says the virtually straight-line ascent that has pushed Apple’s stock above $600 and its market cap to nearly $600 billion can’t continue forever, but clearly there has been nothing to push the pause button yet.

With a lot of evidences that fund managers have a thing for Apple, regardless of style, there could even be some who might look to wring out profits and bail ahead of any potential volatility driven by earnings season when the action of the stock, not the news, matters.

Avatar
Carrie Ann
Carrie Ann is Editor-in-Chief at Industry Leaders Magazine, based in Las Vegas. Carrie covers technology, trends, marketing, brands, productivity, and leadership. When she isn’t writing she prefers reading. She loves reading books and articles on business, economics, corporate law, luxury products, artificial intelligence, and latest technology. She’s keen on political discussions and shares an undying passion for gadgets. Follow Carrie Ann on Twitter, Facebook

Recent Posts

HSBC turns to Asia for future growth

HSBC turns to Asia for future growth

The bank’s maximum pre-tax benefits (90%) come from its Asian business. Chairman Mark Tucker and chief executive Noel Quinn are strugg...
9 hours ago
Wells Fargo to forego asset management unit to private equity for $2.1 billion

Wells Fargo to forego asset management unit to private equity for $2.1 billion

Wells Fargo has been underperforming for the past few years and has undertaken cost-cutting and restructuring to improve its numbers. Wells ...
10 hours ago
Lucid Motors partners with Churchill Capital IV to go public in SPAC mega deal

Lucid Motors partners with Churchill Capital IV to go public in SPAC mega deal

Lucid Motors, the luxury electric vehicle makers, will go public with a blank-check firm Churchill Capital IV Corp in a $24 billion deal, th...
12 hours ago
Aviva hives off French unit to Aéma Groupe for $3.9 billion

Aviva hives off French unit to Aéma Groupe for $3.9 billion

UK’s leading insurer Aviva Plc has sold its French unit for 3.2 billion euros ($3.9 billion), marking the biggest deal under chief executi...
2 days ago
M&T acquires People’s United Financial for $7.6 billion

M&T acquires People’s United Financial for $7.6 billion

In the latest series of US regional banks going in for acquisitions to enter the big boys’ club, M&T Bank has entered into a deal to b...
2 days ago
Swiss Re reports $878 million loss driven by the pandemic effect

Swiss Re reports $878 million loss driven by the pandemic effect

Swiss Re Group, the reinsurance company, reported a net loss of US $878 million for 2020. The company’s net income rose to $2.2 billion fr...
3 days ago