Most investors would consider Apple, Inc. (AAPL) hitting the $1 trillion market capitalization target as a sure thing. With a mid-week closing price tag of $187.36, it’s roughly around a 6% or 7% move away from immortality. No other organization can lay claim to being a trillion-dollar company.
Plus, it’s not even close. Second-place belongs to Amazon.com, Inc. (AMZN), which has a market cap of $784 billion, is approximately 21% away from where AAPL stock stands. The other contenders, Microsoft Corporation (MSFT) and Alphabet Inc (GOOG,GOOGL) also occupy the $700 billion club.
Even more intriguing, once Apple officially becomes a trillion-dollar company, its market value will exceed many top nations’ GDP. For instance, Apple would sit in between Indonesia at the top and Netherlands at the bottom. Add a few more positive swings in AAPL stock, and the vaunted consumer-tech firm could challenge Mexico, which has a $1.2 trillion GDP.
Apparently, the whales are buying into the hype. Most notably, Warren Buffett expressed his love for Apple, recently adding more AAPL stock to his Berkshire Hathaway Inc. (BRK.A,BRK.B) portfolio. Now, Berkshire has approximately a 5% stake in Apple.
With someone like Buffett eagerly investing in an organization, that often opens the rationale for public investors to do the same. However, I’m not entirely convinced that this is the right move. Remember, Buffett can make a multi-million dollar mistake and not even blink an eye. For most of us, we simply don’t have that luxury.
While I’m not suggesting that Apple will fail in its quest to becoming a trillion-dollar company, I do find the recent surge in AAPL stock more than a little bit curious. Three times this year, shares looked as if they might fall off a cliff. Suddenly, with a positive earnings report, all sins are forgiven.
To me – and this is solely my opinion – it smells like a bull trap. Surely, all the enthusiasm for AAPL stock is priced in. Apple is no longer an unknown commodity. Its best hits were delivered when Steve Jobs was around. But with his death came the death of ideas.
Yes, Apple can still churn out iPhones – which represents the vast majority of its revenue stream – but what else can it do? Tablet sales are rather ho-hum, and the wearables market will likely become oversaturated, and sooner rather than later.
Besides all that, let’s get down to the brass tacks. Who would want to buy into this rally, especially one associated with a record-breaking target? Once the psychological furor has passed, the trillion-dollar company would no longer be a novelty, and it’d be back to business as usual.
The problem I have is that Apple’s businesses are no longer unique and experience heavy competition.