Apple, Inc. AAPL hit a major market milestone this week when it became the first company to reach a $2 trillion market cap.
Apple certainly has a massive opportunity ahead with the launch of its first 5G iPhones, but some investors are skeptical about how much growth potential remains for Apple shares.
$3 Trillion Ahead? Loup Ventures' Gene Munster said that, despite the skepticism, Apple has a clear path to a $3 trillion valuation.
“Apple’s current and future golden geese (wellness, AR, autonomous systems) are becoming more central to our lives in this new world,” Munster wrote.
Wedbush analyst Daniel Ives agreed Apple is likely on the way to $3 trillion.
“By 2023, we believe given super-cycle potential and services business,” Ives said. “While the soft macro and COVID backdrop are weighing on near-term consumer demand trends, Apple has a ‘once in a decade’ opportunity over the next 12 to 18 months as we estimate roughly 350 million of Cupertino's 950 million iPhones worldwide are in the window of an upgrade opportunity.”
Stretched Valuation: Cowen analyst Krish Sankar said Apple’s valuation has gotten stretched relative to its historical range, but that may not necessarily be a red flag.
“What has really changed is the mix has shifted. You’ve seen more of a mix shift towards services side. And I think that’s one of the reasons why you’re seeing the multiple grow,” Sankar said.
But while Apple may still have upside remaining, Cerity Partners analyst Jim Lebenthal said investors would be wise to take some profits on the stock after its impressive run.
“I trimmed it a couple of times this year. And that certainly is an incrimination to me but on the other hand, even after trimming it, it’s still a 5.5% position in my portfolio, which is very large for anyone who’s running a diversified portfolio, and even so, that’s underweight to the market,” Lebenthal said.
Apple's traded around $470 at the time of publication.
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