Is $1 Trillion Apple’s Newest Peak Or the Summit?

Let’s get it straight, a mountain can have multiple peaks but one summit, by debated definition, and in reference to each word’s roots. Semantics aside, the question that should be of interest right now is whether Apple’s cap can grow even higher? But first, let’s take a look at the world’s first trillion dollar public company, and how different it is from Apple.

PetroChina’s market cap tapped $1 trillion on Nov. 5, 2007 following a successful debut on the Shanghai Stock Exchange, nearly tripling its value right from the start, with its Hong Kong-listed shares going even higher. PetroChina rose to $1.1 trillion via speculators and the $140/barrel high oil prices of 2007. As oil prices plunged, PetroChina’s market value dropped to below $260 billion by 2008 year’s end.

Estimations by macrotrends.net on March 31, 2018 puts PetroChina’s market capital at $133.61 Bn, and China’s turn towards electric vehicles and renewable energy is only going to make it harder for PetroChina to ever exceed or even come close to its 2007 debut.

 

Whereas, the use of smartphones doesn’t seem to be dropping, and rather rapidly increasing. Plus, Apple isn’t just a hardware manufacturer, the services provided exclusively for Apple products are significant profit drivers. The Apple ecosystem is one of the company’s greatest assets along with its growing barrage of product accessories, and upgrades.

The iPhone revenue growth itself wasn’t from a major increase in unit sales, but from the ability to hike the retail price and sustain unit sales growth. This is definitely a testimony to Apple’s exclusive services and the brand’s street rep. Last quarter, Apple put $9.55 billion in revenue from services on the books, a 28% leap YOY. On top of that, people just seems to love iPhones that are jacked up with bigger screens, and price tag, like the upcoming supersized iPhone X, and reissues of older models with tech upgrades like the iPhone 6.

And Apple has proven itself countless times that it is not a one trick pony. The corporation is lining up innovative services for original TV shows, and just bought Texture, a one stop shop for digital magazines. Augmented Reality is also in Apple’s list of software and hardware development.

With a bunch of AR apps already available for i-OS, the successor to iPhone itself is already in the makings. Smart glasses or AR glasses from sci-fi movies where everything about everything is augmented in with the real world are on their way to crossover from the otherside of the screen. And of course, self-driving cars, yeah, Apple is branching towards that too with what Tim Cook calls: “the mother of all AI projects.”

 

Apple Inc’s strength from within is no doubt at the core of its success, but having a buddy in the high up, especially one who tweets his “fire and fury” from its iPhone really helps.

Trump’s corporate tax cuts alone did give apple roughly a 10% boost in profits. According to CNBC, Apple’s corporate tax rate in Q2/2018 fell to 13.3 percent from lasts years Q2 tax rate of 22.9%. Perhaps that’s one of the reason why Apple Inc’s CEO, Tim Cook, has been less than adamant in criticizing Trump’s tariff policies, and just criticizing tariffs in general.

And the tariffs on China hasn’t touched Apple’s main products, with the latest tariff plans possibly including the Apple Watch, which is the one of world’s best selling, and recognized wearable technology to date.

Then again, considering how much people put into how they look, a price hike for the coolest tech wrist accessory would be like meh for the hi-tech hipster. Maybe a heftier price tag would turn into added value for a watch that can track health info, remote control your other Apple devices, and have Mickey or Minnie mouse tell you what time it is.

 

So, is the big T a new peak or summit? I think it’s just a new benchmark for this ever growing mountain name Apple, but don’t take my word for it. When CNBC interviewed the Chairman and CEO of Berkshire Hathaway:  “It is an unbelievable company,” Buffett said. “We like very much the economics of their activities. We like very much the management and the way they think.”