After blowing past $500B market cap, Apple seen headed for $1 trillion

Posted:
in AAPL Investors edited January 2014
After surpassing Microsoft's record and becoming the most valuable company ever on Monday, Apple has passed a "key sentiment barrier" on its way to a $1 trillion market valuation, one analyst believes.

Brian White with Topeka Capital Markets said in a note to investors on Tuesday that previous companies with market capitalization above $500 billion were already dominant in their markets. Apple, however, has a relatively small share of many markets where it competes, giving the company potential for even more growth.

"For example, Microsoft, held over 90% market share for PC operating systems at the peak cap, while Intel had over 80% of the PC processor market and Cisco had over 70% share in the networking market," White wrote. "On the other hand, IDC estimates Apple held just 4.7% of the PC market in (the first quarter of 2012) and 64.4% share in the mobile phone market in (the second quarter)."

Back in June, White dismissed a belief held by some on Wall Street that the $500 billion market cap would be a price barrier to further upside at Apple. Some investors theorized that the $500 billion market cap threshold was a "barrier" for stocks.

At the time, he analyzed five U.S.-based companies that at one time enjoyed market capitalizations of about $500 billion or more: Cisco Systems, Exxon-Mobile, General Electric, Intel and Microsoft. However, among that list, White found "little similarities with Apple."

AAPL


In addition to what he called "monopoly-like market positions," the five previous $500-billion companies also had rich price-to-earnings ratios of over 60 times when they crossed the half-trillion-dollar threshold. In contrast, Apple is currently trading at just 10.7 times Topeka's calendar year 2013 earnings-per-share estimate.

White believes Apple's march to a trillion-dollar market cap will continue with anticipated product launches coming later this year, including a next-generation iPhone and a so-called "iPad mini." The analyst also believes Apple is planning to release a television set at some point in the future, and will also begin selling the iPhone through China Mobile, the largest mobile carrier in the world.

"We believe Apple is on a path to generate the highest annual net income of any publicly traded company ever by at least (calendar year 2013)," he wrote. Topeka Capital Markets has reiterated its 12-month price target of $1,111.00 for AAPL stock.
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Comments

  • Reply 1 of 55
    markbyrnmarkbyrn Posts: 657member


    Of course if Apple fails to meet these wild analyst expectations, the doomsdayers will cluck that it's the beginning of the end for Apple. 

  • Reply 2 of 55
    MacProMacPro Posts: 19,500member
    markbyrn wrote: »
    Of course if Apple fails to meet these wild analyst expectations, the doomsdayers will cluck that it's the beginning of the end for Apple. 

    The Apple haters will say reaching a trillion is a sign of weakness and that it proves Apple is a failure.
  • Reply 3 of 55
    red oakred oak Posts: 949member


    I don't think Apple has 64.4% of the mobile phone market anywhere.   Even if you just look at smartphones in the US.  Is think that a typo 


     


    Of total mobile phones (feature + smartphones), Apple has ~ 5%.  Of total global smartphone only sales, the estimates I see is Apple currently having a ~ 20%.   Smartphones I believe only account for ~20% of the total global phone market  


     


    AI:  please confirm this number and what region and category it covers.  It is germane to the story  

  • Reply 4 of 55


    Agreed, not market share, perhaps profit share

  • Reply 5 of 55
    lerxtlerxt Posts: 186member
    Wrong. Corrected for inflation MS was worth a lot more..
  • Reply 6 of 55
    MacProMacPro Posts: 19,500member
    lerxt wrote: »
    Wrong. Corrected for inflation MS was worth a lot more..

    ... it doesn't really matter, it's just a fun factoid. Being worth twice as much as MS is also just a fun factoid as is having far better products. When they get to a trillion I'm sure a trillion will be worth less than it is today. No problems. It's all just fun for us here on AI, that's why Apple do everything, just to entertain us here, didn't you know? /smile
  • Reply 7 of 55


    Yes, Microsoft was worth a lot more but I read that corrected for inflation Microsoft was in the low $800 billion range. I can't find where I saw it right now.


     


    So, Apple has a ways to go, but should easily move past the all time high set by Microsoft.

  • Reply 8 of 55

    Quote:

    Originally Posted by digitalclips View Post



    ... it doesn't really matter, it's just a fun factoid. Being worth twice as much as MS is also just a fun factoid as is having far better products. It's all just fun for us here on AI, that's why Apple do everything, just to entertain us here, didn't you know? /smile


     


    Well said! And it WILL be entertaining too when they become the all time largest, by market cap, of all time, adjusted for inflation.


     


    LOL on the Apple does everything just to entertain us here! Too funny!

  • Reply 9 of 55
    lerxt wrote: »
    Wrong. Corrected for inflation MS was worth a lot more..

    I think you mean "adjusted for inflation".... There is no law that says this has to be done or that it is inaccurate without factoring in inflation. Why don't we adjust Microsofts 1999 share price to match Apple's current P/E ratio and then adjust for inflation. That seems reasonable and would still show that Apple is much bigger now.
  • Reply 10 of 55
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by markbyrn View Post

    Of course if Apple fails to meet these wild analyst expectations…


     


    To be fair, they've been saying "trillion" for a decent while now. I'm actually quite impressed with their restraint in this regard, as usually they would say, "Apple is slated to reach $1 trillion market cap by the end of next quarter."






    Originally Posted by Lerxt View Post

    Wrong. Corrected for inflation MS was worth a lot more..


     



    Is that past money worth more now than then? Or maybe it will have always been worth that much? So Microsoft wasn't ever actually worth $600 billion at the time, it was worth an ever-growing, $infinity-1 at any given time because of inflation? Does that mean they can buy a company now with a $200 billion market cap and pay them with the money they simultaneously had and didn't have back then that they wouldn't have had back then but did have back then now? Or should they wait for that money to reach $300 billion extra?

  • Reply 11 of 55

    Quote:

    Originally Posted by Red Oak View Post


    I don't think Apple has 64.4% of the mobile phone market anywhere.   Even if you just look at smartphones in the US.  Is think that a typo 


     


    Of total mobile phones (feature + smartphones), Apple has ~ 5%.  Of total global smartphone only sales, the estimates I see is Apple currently having a ~ 20%.   Smartphones I believe only account for ~20% of the total global phone market  


     


    AI:  please confirm this number and what region and category it covers.  It is germane to the story  



    The Washington Post has the IDC second quarter as


                Android  104.8 million units, 68.1 percent share


                iOS            26.0 million units, 16.9 percent share.


     


    I would assume that "share" means revenue.


     


    http://www.washingtonpost.com/business/technology/worldwide-market-share-for-smartphones-a-market-dominated-by-apple-and-android/2012/08/20/dc1bb65e-eb10-11e1-866f-60a00f604425_story.html

  • Reply 12 of 55
    jragostajragosta Posts: 10,473member
    lochias wrote: »
    [SIZE=12px]The Washington Post has the IDC second quarter as[/SIZE]
    [SIZE=12px]<span style="font-family:Georgia, serif;line-height:1.5em;">            Android  104.8 million units, 68.1 percent share</span>
    [/SIZE]
    [SIZE=12px]<span style="font-family:Georgia, serif;line-height:1.5em;">            iOS            26.0 million units, 16.9 percent share.</span>
    [/SIZE]

    [SIZE=12px]<span style="font-family:Georgia, serif;line-height:1.5em;">I would assume that "share" means revenue.</span>
    [/SIZE]

    http://www.washingtonpost.com/business/technology/worldwide-market-share-for-smartphones-a-market-dominated-by-apple-and-android/2012/08/20/dc1bb65e-eb10-11e1-866f-60a00f604425_story.html

    Share could mean either 'revenue' or 'units'. In the mobile phone market, it usually means 'units' unless they specifically mention 'revenue share' or 'profit share'.

    eta:
    Given the numbers above, they definitely mean 'units'. Both the number of units and the percent share have the same ratio-4.03:1. Unless the average selling price is identical, that indicates that the share numbers are based on units.
  • Reply 13 of 55
    A trillion smackers ?!?

    Whoa ....

    That's a lotta simoleans.

    Unfortunately, it will never happen ....

    If Steve were here, OK -- but he isn't, so no.
  • Reply 14 of 55
    solipsismxsolipsismx Posts: 19,566member
    I think you mean "adjusted for inflation".... There is no law that says this has to be done or that it is inaccurate without factoring in inflation. Why don't we adjust Microsofts 1999 share price to match Apple's current P/E ratio and then adjust for inflation. That seems reasonable and would still show that Apple is much bigger now.

    +++QFT

    And if we factor in the internet bubble we see that Apple's real valuation is much, much higher than MS ever was.
  • Reply 15 of 55
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by BoxMacCary View Post

    Unfortunately, it will never happen ....

    If Steve were here, OK -- but he isn't, so no.


     


    Maybe you should bet me a trillion dollars that it won't.




    You're certain of yourself, right?

  • Reply 16 of 55
    red oak wrote: »
    I don't think Apple has 64.4% of the mobile phone market anywhere.   Even if you just look at smartphones in the US.  Is think that a typo 

    Of total mobile phones (feature + smartphones), Apple has ~ 5%.  Of total global smartphone only sales, the estimates I see is Apple currently having a ~ 20%.   Smartphones I believe only account for ~20% of the total global phone market  

    AI:  please confirm this number and what region and category it covers.  It is germane to the story  
    it's a typo. Should be 6.4%
  • Reply 17 of 55
    solipsismxsolipsismx Posts: 19,566member
    boxmaccary wrote: »
    A trillion smackers ?!?
    Whoa ....
    That's a lotta simoleans.
    Unfortunately, it will never happen ....
    If Steve were here, OK -- but he isn't, so no.

    What is the reasoning behind that? It's gone up tremendously since Steve has been gone so what rationale or proof do you have that Apple will now start failing?
  • Reply 18 of 55
    lkrupplkrupp Posts: 10,038member
    lerxt wrote: »
    Wrong. Corrected for inflation MS was worth a lot more..

    Sour grapes from an iHater. Move along please.
  • Reply 19 of 55
    lkrupplkrupp Posts: 10,038member
    Keep in mind that America loves a winner, until they actually win. Then it's tear down and destroy time. The new American culture is that any winner must have won by deceit, theft, oppression, greed, or criminal actions. The winner "didn't build that" after all. I'm glass- half-empty on this one. The long knives are being sharpened.
  • Reply 20 of 55
    djmikeodjmikeo Posts: 179member

    Quote:

    Originally Posted by Lerxt View Post



    Wrong. Corrected for inflation MS was worth a lot more..


    So adjusted for inflation, Microsoft's $258B current market cap is actually closer to $200B compared to it's peak cap?

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