The race to T is on.
With its market cap now at $820 billion, Apple is leading the pack in its run to become the first company with a one-trillion-dollar price tag. Google’s holding company Alphabet is not too far behind, with a current market value of $648 billion and Amazon’s coming on strong, now valued at $478 billion.
So who’ll get there first and what does it all mean?
In a recent note to investors, RBC Capital Markets analyst Amit Daryanani said Apple could hit the target “in the next 12 to 18 months,” assuming the Cupertino tech giant can continue to wow the world with its products and services. And with its share price jumping after this week’s earnings announcement and positive news expected with the launch of the iPhone 8 later this year, it appears the world is, indeed, wowed.
Daryanani recently raised his near-term price target for Apple from $157 (which is where it closed today) to $168 per share, based on optimism that the company will continue to boost its earnings per share in 2019. If the trend continues, Apple may be headed into the $192-195 per share range, which would mean its market cap could climb to $1 trillion.
This week’s earnings announcement also seemed to buttress Daryanani’s optimism: going into Tuesday’s earnings report, most observers figured Apple might delay the launch of its next flagship iPhone, with rumors calling for an October release date or even later. But Apple surprised everyone by offering an upbeat picture for the current quarter, predicting revenue ranging from $49 billion to $52 billion, above Wall Street’s forecast of $49.2 billion. And that, at least in many analysts’ eyes, meant Apple would indeed launch the iPhone 8 by the end of September.
“There’s simply no way to achieve the kind of growth their guidance suggests without that,” said Jan Dawson, an analyst at Jackdaw Research said in a note to investors.
“For Apple, reaching that trillion-dollar mark is both good news and bad news,’’ said analyst John Jackson with IDC. “The good news is that Apple, unlike Alphabet and Amazon, is not a services company per se. And since service companies are increasingly coming under scrutiny by regulators, like Google’s recent fine by the EU, Apple with a trillion-dollar value will be far more insulated. The bad news for Apple, though, is that even as it become bigger, it’s still selling hardware and there’s a natural limit to growth that can come from hardware.’’
Jackson says that while Apple’s in the lead in the race for the trillion-dollar cap, ‘’it’s progressing toward the mark more slowly that its rivals. Still, all these companies are unfathomably large and getting unfathomably larger and more influential and they’re starting to buy into other sectors, like Amazon’s purchase of Whole Foods. In the end, one or all of these huge companies will possess outsize influence on the greater economy.”
And, says Jackson, “if a services company like Amazon or Google gets there first, that’ll be more significant because it will have a bigger impact on the overall economy than Apple would if it gets there first.’’
As Apple races forward, Amazon seems to be gaining, venture capitalist and former analyst Gene Munster recently told CNBC.
“When you look at the markets they are going after, it’s easy to understand how this could be a trillion-dollar company,” Munster said of Amazon.
“It’s feasible, but you need to take it in . . . context,” said Munster, co-founder of Loup Ventures and formerly a top Wall Street tech analyst. “This is a glacier, it moves deliberately in a direction, and it’s just going to carve up the retail landscape. So this is something that’s not going to happen in the next couple of years.”
