Apple Rises to the Top Again with Historic $4 Trillion Market Value

Apple has regained the throne as the world’s most valuable company as the tech giant closes in on a historic $4 trillion market capitalization.

Apple’s Recovery and Growth

Despite a slow start to the year, Apple has returned to prominence, outperforming major US indexes once again. The company’s stock has achieved new all-time highs in December, riding the wave of strength in the large-cap tech sector. The ongoing excitement around artificial intelligence has further fueled this trend.

After a remarkable 30% surge in 2024, the question now arises: Is Apple stock too far extended, or is this rally just beginning?

Buying at New Peaks

Investing in stocks at new all-time highs has historically been advantageous. This phenomenon signals that higher prices might be forthcoming.

Analyzing the current state of the economy reveals a lowering trend in inflation, better-than-expected corporate earnings, and a robust U.S. consumer. All these factors suggest that Apple may continue its upward momentum.

While major indices saw a pullback last week, volatility increased to levels unseen since the early August sell-off. However, Apple stock remained strong, managing to finish the week at an all-time high:

Image Source: StockCharts

The limited selling of Apple shares last week indicates substantial institutional buying interest. Stocks that maintain stability during turbulent times often lead the market recovery.

Understanding Apple’s Business

Apple (AAPL) is engaged in designing, manufacturing, and marketing mobile communication devices, personal computers, and portable digital music players. Headquartered in Cupertino, California, its well-known products include the iPhone, iPad, Mac, and Apple TV, along with software such as iOS and macOS.

Beyond device sales, Apple has a significant Services segment that generates revenue from cloud services, the App Store, Apple Music, AppleCare, Apple Pay, and other licensing services. This division has become a major source of income, with over 1 billion paid subscribers.

Additionally, Apple leads the Wearables market as customers increasingly adopt products like the AirPods and Apple Watch, strengthening its footprint in personal health monitoring. Other services offered include Apple News+, Apple Card, and Apple Arcade.

With more than two billion active devices globally, this year’s focus has been on Apple Intelligence. In collaboration with OpenAI, Apple has integrated ChatGPT into its latest iPhones, enabling users to write better, create beautiful images, and enhance communication with a more advanced Siri.

Apple Stock – The Zacks Summary

Apple is included in the Zacks Computer – Mini Computers industry, which ranks in the top 34% of all Zacks Ranked Industries. Being in the upper half suggests that this group is likely to outperform the market in the next 3 to 6 months.

Research indicates that nearly half of a stock’s price appreciation can be attributed to its industry grouping. The top 50% of Zacks Ranked Industries outperform the bottom 50% by more than a factor of 2 to 1. By concentrating on leading stocks within this top tier, investors can enhance their stock-picking success.

Apple has surpassed earnings estimates for the past seven quarters. Most recently, it announced fiscal fourth-quarter earnings in October of $1.64 per share, exceeding the $1.49/share Zacks Consensus Estimate by 10.1%. The company has a trailing four-quarter average earnings surprise of 5.1%.

Currently, Apple holds a Zacks Rank of #3 (Hold) with projected earnings growth of 10% this fiscal year, alongside expected revenues of $412.8 billion. Given Apple’s history of beating estimates, these figures might prove conservative.

Next Steps for Investors

Buying stocks at new highs has consistently yielded positive results. A stock that surpasses a previous high is generally considered a sign of strength. Apple seems to be breaking away from a multi-month consolidation phase, adding weight to the bullish argument.

The market suggests we should be prepared for surprises. A strong U.S. consumer and excitement around artificial intelligence have driven tech stocks like AAPL back to previous highs. Keep a close watch on this tech powerhouse as it appears well-positioned to close the year on a positive note.

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.