Apple became the first firm on Wall Street to have a market value of more than $3 trillion, the latest proof of big tech’s seemingly inevitable domination in financial markets.
The iPhone maker rose 2.3% on Friday, adding to a rise that has increased its value by more than $983 billion this year, putting it about a half-trillion dollars ahead of the next-largest firm. Apple’s achievement aided the Nasdaq 100 Index to its best-ever first half, propelling a larger market rise that highlighted the dominance of tech megacaps.
The rally has caught many strategists off guard, leading some to question its viability as the economy faces potentially more Federal Reserve interest-rate hikes. However, investors remain excited about the growth potential of artificial intelligence, and they have also gravitated toward the kind of quality factors that Apple has in spades, including a strong balance sheet, durable revenue streams, and a robust competitive position.
“The reason Apple has outperformed for more than a decade isn’t because investors are being foolhardy, but because it is executing on a business strategy that works, its earnings plan is working, and its lock on the consumer is only getting stronger,” said Jonathan Curtis, director of portfolio management for Franklin Equity Group.
“The balance sheet is phenomenal, it pays a dividend it can continue to grow, it has an active repurchasing program, and a consumer staples-esque platform business, all powered by a device people look at four hours a day,” Curtis said.
In a sign of Wall Street’s ongoing optimism about the stock, Citi on Thursday began coverage of Apple with a buy rating, writing that its ability to continue expanding margins was underappreciated. It sees additional upside of about 30% for the stock, a target that would take Apple close to a $4 trillion valuation.