Apple Incorporated on June 30, made Wall Street history as the first company in the world with a market value of over $3 trillion.
This development is the latest sign of big tech’s seemingly unstoppable dominance in equity markets, according to Bloomberg.
The company on Friday gained 2.3% that rally added more than $983 billion to its size in 2023. This leaves the iPhone maker at roughly a half-trillion dollars above the next-largest company. Apple’s ascent to the milestone helped the Nasdaq 100 Index to its best-ever first half ever, driving a broader stock rally that underscored the dominance of tech megacaps.
Bloomberg said 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 are optimistic about the influence of the growth of artificial intelligence (AI) which has also made them shift toward the kind of quality factors that Apple has in spades, including a strong balance sheet, durable revenue streams, and a robust competitive position.
Jonathan Curtis, director of portfolio management for Franklin Equity Group has this to say “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”.
“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,” he added.
In 2011, Apple first hit the world’s most valuable stock, when it achieved a market cap of under $340 billion. At that time, it comprised about 3.3% of the S&P 500. Since 2011, the company has rarely forfeited that market ranking.
Again, in 2018, Apple first reached $1 trillion in value, and moved to a $2 trillion valuation in 2020—even during the hit of COVID-19, becoming the first US company to surpass that level.
In early 2022, the company rose above the $3 trillion level but failed to close above it, and that peak marked the start of a downtrend that has now been fully erased.
Only a few companies are of this size in the US. They include Alphabet Inc., Amazon.com Inc., and chipmaker Nvidia Corp., which became the first trillion-dollar chipmaker earlier in 2023.
Apple is not the biggest gainer of the year — Nvidia, Meta Platforms Inc., and Tesla Inc. have more than doubled.
