Why Apple’s market cap is going to $2 trillion

“Apple is going to a $2 trillion market cap by the year 2027,” Brian Sozzi writes for TheStreet. “Because, why talk about Apple at $1 trillion? That’s old news, since it’s likely to happen within the year.”

“For all intents and purposes, Apple is an undervalued bank. Solving the issue of how to use Apple’s exploding cash pile will be one of the biggest tasks of Tim Cook’s successor,” Sozzi writes. “Expect the company to finally realize it must go on a serious shopping spree to form the tech version of Berkshire Hathaway. In no way is the market pricing in an Apple that owns Uber, Tesla, and Twitter by the year 2027.”

“You have to believe Apple is working on something transformational in the areas of self-driving cars and artificial intelligence,” Sozzi writes. “Whatever comes from these currently secret products could prove to be the next standard in how we live our lives.”

Read more in the full article here.

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The next ten years are going to be absolutely amazing for Apple. The company has just started to really get going!

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  1. Here’s the flaw with how they think Apple is going to $2 Trillion…

    Some companies are driven by conquerors. Microsoft was driven to conquests by Steve Ballmer (even when Gates was CEO). These companies spend most of their energy looking at who they can kill and what they can take over and lose focus on creating great products and services.

    Watch interviews with Apple from the early years to present (minus the dark years). The entire executive team has been driven by a passion on developing great products and services. They make statements like, “everyone of our products could fit on this table” or “as big as we get, we still consider ourselves a small company”.

    Apple has let many acquisition opportunities pass by. They’ve also sat out on many products and services they could offer (or upgrade) because they’d rather focus on a smaller set of things to perfect as best as they can.

    Thus, while it would be possible to project a path into the future where Apple uses it’s cash hoard to conquer new territories, bringing in more cash to spend conquering even more in an endless cycle… that’s entirely not what any executives at Apple want to do.

    This may change at some point when the executive team is replaced with those who want to conquer, but that would take a long time since the executive team brings in like-minded people with the same passion.

    Apple may very well go to $2 Trillion, but it won’t be from losing focus and becoming a conqueror (at least not anytime soon). It would come from focusing on and building some really great transformational products or services that opens up major streams of profit.

    1. All those reasons you point out show that Apple doesn’t go for their rivals jugular. However, Wall Street loves those destroyer qualities in a company. Greedy big investors want to see the competition totally annihilated so that their company dominates without any worries whatsoever. People losing their livelihood is never factored into the minds of the wealthy investors.

      I’m sure Apple could deliberately and directly destroy the competition but it doesn’t. I’m glad Apple doesn’t do that. Even though I’m an Apple shareholder, I hate to see other companies going out of business because I know how employees suffer from losing their jobs. I’ll never understand the constant praise Amazon gets for destroying dozens of retail businesses. That is really harmful to America as a whole and only good for the few wealthy investors who own Amazon stock.

      Wall Street only praises companies who steamroll smaller companies so there’s nothing else left. Apple is making as much money as any company can but they’re not totally destroying their competition. For this, Apple gets no praise. This idea Wall Street has that only one company can be left standing is far too dangerous for America’s economy. So many people will be hurt by that reasoning. Many people’s need to have jobs is far more important than a few investors need to be wealthier.

      1. I agree with your points & comments.

        As I read a sentence, the thought of ‘Gordon Gecko’ magically appeared in my head. Truly one of of Michael Douglas’ best ever parts and scenes, the infamous “Greed is Good” speech. One take.

        “The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.”

    1. Yes it is wrong. Such a move would result in an absolute monopoly. A normal administration would block it via the Sherman act. Not sure if the current administration cares at all about competition or consumer rights. He certainly campaigns actively against labor competition.

  2. Uh, $1T means Apple will be at around $193 a share which is more than $35 above the present share price. To reach $2T I don’t even want to waste my time calculating the impossibilities of such a number. Aren’t the Apple boo-birds still talking about how the iPhone is going to be replaced by some amazingly awesome Facebook app running on a $50 Android smartphone? You know, the new American version of WeChat.

    I’ll be quite satisfied if Apple can hold its market cap above $800B for more than a few weeks after the anti-Apple factions start ripping holes in Apple’s current quarterly results. The iPhone ‘delays’ may have been somewhat disproven, but now there will be iPhone ‘unit restraints’ to throw doubt into Apple’s value. It will be how Apple won’t even be able to get close to consumer demand for the iPhone, so let the downgrades begin. Tesla will face the same issues for the Model 3 but everyone will see that as a good sign for Tesla. Not so for Apple and iPhone.

  3. I’d love to have a crystal ball that can let me see accurately 10 years into the future. I don’t have one and I don’t believe this writer has one either.

    This is a typical “shotgun ’em with BS and eventually SOMETHING you write will turn out to be true” approach. Kinda like the monkey writing Shakespeare sonnets prediction.

  4. Oh for fuck’s sake – AAPL is $180B from $1T. That nearly 20% increase over the current high.
    Let’s get to that mark first before even considering anything higher.
    Why do analyst come out with this crap?

  5. China knows that so-called “quantitative easing” makes US currency a ghostly value. That’s why it’s buying US land, businesses, etc., stuff with real value, handing the US it’s own worthless money.

    So I think that Apple cash reserves are at risk for the same reason although its value is propped up now.

    1. It’s not just in America, you should look at how much money China is pumping into continents like Africa, but more importantly the massive projects that they are completing within their own borders.

      China is currently building it’s own space station and doesn’t need to collaborate with other nations to make it possible. They are switching to renewable energy at an astonishing pace and will not be so reliant on fossil fuels in the future.

      It’s also fascinating and somewhat disconcerting to observe how China operates when it comes to diplomacy. Just as with the economy, industry, space technology and industry, they’re playing a long game and placing all their pieces for maximum advantage in the future.

      I’ve been taking an interest in China ever since I first visited China many years ago and I used to believe that China would overtake America as the number one superpower within my lifetime ( lets say 2050 ). I now believe that it will happen very much more rapidly than I previously imagined, partly due to China adopting very sophisticated strategies on multiple fronts, but crucially because America is currently doing exactly the opposite.

      1. China, The “#1SUPER POWER”. How DID they (will they?) achieve such a pinnacle? iWill tell you. China Corruption. Pure and simple. Where is Green Peace on China? China could give a rats ass about the environment. It is all a facade. Does China’s “Tyranny” even have an EPA? China IS the #1 polluter of our planet. China’s dictatorship has a total and utter disregard for its environment and their lemmings (people). What has China done for YOU latley? Pathetic. All the while, Bozo The Amazone reeks havoc amongst U.S. retailers both BIG & small through the import of CHINA MADE SHIT PRODUCTS. Look at the products made in America from the 1800’s to 1950-60 + or – …… They were WELL MADE STURDY PRODUCTS THAT DID NOT HAVE PLANNED OBSOLESCENCE. Un fcking real. All because of IGNORANT CHEAP ASS AMERICANS LOOKING FOR A DEAL! Does BOGO ring a bell anyone? What a Skull Fck.

    2. All currencies are floating valuations based on the faith. Inflation since countries removed themselves from the gold standard has actually been high, it’s just that traditional measures don’t capture it. banks and companies now print their own money– mortgages, bonds, reits, derivatives. That is why Glass Stiegal needs to be reinstated. So that the money supply isn’t diluted by self serving profiteers at the expense of everyone else.

  6. I don’t see Apple doing a lot of acquisitions. It is not in their nature. However, they do seem to continually surprised us with new products or markets that can earn them a lot of money. ARkit is a good example. It is hard to imagine how this will be monetized in one or two years let alone a decade from now. What else is Apple thinking of which won’t see the light of say for five years? Several years ago when Apple went 64 bit across the board they got some pushback. 64 big wasn’t needed in phones. Super fast processors weren’t needed in phones. Well, now we see why they did that. Apple is now in the catbird seat to enter any market that requires fast or real time modeling.

    I don’t think it is a bad thing to speculate about 2T$. If it takes a decade then that is about 7% growth and 2 or 3% of that is inflation. Put that way it doesn’t seem so impossible.

    1. Agreed absolutely.

      Analysts are always saying that Apple needs to buy certain massive companies, but Apple doesn’t do that. Their only really big acquisition was Beats and I think there were unique circumstances which came into play on that occasion. Apple mostly buys small companies that few have ever heard of, but who have specialised technological expertise which can be advantageously deployed within Apple.

      One thing that you can be sure of with Apple is that important developments will mostly appear without much warning. The switch to Intel came out of the blue, iPhones had 64bit chips before most experts imagined than suitable 64 bit chips would be commercially available. Swift suddenly appeared from nowhere and has rapidly become a very serious programming language. Before the recent WWDC, A.R. was largely being dismissed as a novelty with possibly a few serious specialised uses, but ARKit has instantly caught people’s imagination.

      The thing that always amazes me is how Apple thinks about the ways to monetise technical innovations. Plenty of other companies come up with great innovations and then see if there is a market for them, lots of good ideas fall by the wayside in that way. Apple considers the commercial possibilities alongside the technical development. Sometimes ( such as Swift ) they will not charge for exciting things, but keep it solely usable on Apple equipment, selling more hardware but simultaneously facilitating more sophisticated application development, which adds value for Apple’s customers. Other times ( such as AirPods ) they develop something which will work on rival equipment, but offers extra advantages when used with Apple equipment. Then there are solutions like Apple Pay, which works with standard contactless payment terminals, but brings new advantages to customers and retailers, increasing security and convenience for both and resulting in widespread and rapid adoption.

      I have my doubts about AAPL being worth 2T$ in the near future, partly because Apple is still buying back shares at a very high rate, meaning that the individual share price will need to be well above $400 per share for the market cap to reach that level. The other reason why I don’t see that happening is that political or world events will get in the way. These days, the world is becoming very unstable and without cool heads in charge, things can rapidly spiral out of control, to everybody’s detriment.

  7. Let’s not get ahead of ourselves. Apple hasn’t hit $1 T US yet, and a significant reason for the runup in stock prices, including AAPL, is that corporations are vacuuming up their own shares. This of course is the easiest thing a corporate executive can do to pump stock price in the short term to line his own pockets or gain the adoration of the market analysts, but it also means that these companies in general are not doing their best to be hiring more workers, building new factories, or rolling out product updates on a timely schedule. Evidence: Mac Pro, Mac Mini, displays, Airport, humpback iPhone battery pack, Aperture, iTunes, and anything that Cue touches. All complete embarrassments that would never have happened if Apple leadership still cared about offering the best user experience instead of making themselves ludicrous rich or hitting some arbitrary financial valuation. Apple already is camping on more money than they know what to do with, how about lowering prices and hiring some people to update all the stale products that Apple should have updated years ago? Bottom line, I liked Apple much more when they were the underdog and had to try harder to earn customers. They are getting fat and lazy now.

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