Today, the Apple Maven explains why, even at a record price of $160, Apple’s position as “largest wig in tech” definitely justifies owning shares.
Apple stock (AAPL) – Get Apple Inc. (AAPL) Report has shot to new highs once again, accumulating staggering cumulative gains of about 500 percent over the previous five years, whether you like it or not. The stock has been rewarded by the market, which has bid it up to a total market valuation of over $2.5 trillion, indicating that the Cupertino corporation is a major participant in practically every sub-segment of consumer technology.
Apple stock reached historical peaks and reclaimed the position of most valuable in the world for three most likely reasons: (1) high expectations for iPhone sales in the holiday quarter; (2) opportunities in mixed reality through the metaverse; and (3) autonomous EV. There is one common theme that connects these three factors: Apple is at the center of nearly all relevant trends in consumer tech.
Start with the first item. While the smartphone seemed to be heading towards the maturity and declining stages of its lifecycle a few years ago, growth in unit sales has picked up recently. The most likely catalysts were better cameras, more applications, and the transition to 5G mobile technology.
But make no mistake: the recent turnaround in smartphone sales was not sparked by innovations introduced by Huawei or Samsung. Apple’s entry into the 5G era with the iPhone 12 is what most likely caused global smartphone shipments to rise by an estimated 11% in 2021 vs. a decline of 10% in 2020. In fiscal 2021, iPhone revenues jumped 39% vs. a decline of 15% in fiscal 2019, suggesting that Apple has single-handedly dragged the smartphone industry out of the gutter.
Regarding AR and VR (augmented and virtual reality), Morgan Stanley has recently introduced the idea that Apple will likely be the main gatekeeper of the metaverse. The research company suggested that the 3D virtual environment will only become mainstream “if or when Apple enters the space”. In other words, the Cupertino company’s future mixed reality products have a good chance of becoming the iPhone-equivalent of the next generation.
Lastly, rumors around the Apple Car have heated up lately. Chatter suggests that Apple will come to market with a fully autonomous car by 2025. Morgan Stanley again weighed in, arguing that Apple’s entry into the EV (electric vehicle) space will be the bear case for the rest of the sector. The key reason:
This is yet another case in which Apple might not be the first to market, but the most relevant player that reshapes it. When it comes to consumer tech products and services, Apple as the key gatekeeper has become a common occurrence. For evidence, just look at Snap’s financial performance following Apple’s iOS policy change on privacy.
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