Tech giant Apple has recently accomplished a significant feat, emerging as the inaugural corporation to attain a market value surpassing US $3 trillion. This outstanding accomplishment underscores the enduring impact and resilience of the iPhone, a ground-breaking device that continues to revolutionise daily life and global commerce.
The first $3 trillion valued company
Apple’s journey toward this historic milestone has been truly impressive. In August 2018, Apple made history by becoming the first company ever to surpass the valuation milestone of US $1 trillion. Despite the challenges posed by the Covid-19 pandemic, Apple further solidified its position by reaching the US $2 trillion mark on August 20, 2020. And now, it has become the first company in the world to achieve an astonishing US $3 trillion valuation.
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The origins of Apple can be traced back to its modest beginnings in 1976 when Steve Jobs, Steve Wozniak, and Ronald Wayne established the company in a garage. From those early days of producing personal computers, Apple’s journey has been marked by numerous obstacles and setbacks. However, under the guidance of Tim Cook, who assumed the role of CEO following Steve Jobs’ resignation in 2011, the company’s stock has quadrupled, propelling it into the trillion-dollar territory. The path Apple has taken could have unfolded quite differently if not for pivotal events such as Steve Jobs’ departure and subsequent return, the acquisition of NeXT, and Cook’s assumption of leadership.
As the world’s first company to reach a market value of $3 trillion, Apple stands as a remarkable exemplar of how unwavering dedication to innovation, quality, and customer satisfaction can lead to unparalleled success in the ever-evolving tech industry. Headquartered in Cupertino, California, Apple Inc. is a multinational technology company.
With $394.3 billion in revenue in 2022, Apple is the world’s largest technology company by revenue. As of March 2023, it is also the world’s largest company by market capitalisation. Apple ranks as the fourth-largest personal computer vendor by unit sales and the second-largest mobile phone manufacturer globally as of June 2022. It is recognized as one of the Big Five American information technology companies, along with Alphabet (Google’s parent company), Amazon, Meta Platforms, and Microsoft.
Factors behind Apple’s success
Apple’s triumph can be attributed to several key factors that have propelled the company to unparalleled success. One of the secrets to Apple’s achievement lies in its unwavering commitment to creativity and innovation. The company continuously strives to push boundaries and create products that are truly revolutionary and disruptive. Apple has been the pioneer in introducing game-changing devices such as the iPhone, music player, photo editor, and game console, setting new standards in these industries. Although Apple was not the first to enter the smartphone or MP3 player market, its offerings were marked by revolutionary design and performance, forcing competitors to play catch-up.
Staying ahead of the competition is another crucial aspect of Apple’s success. The company has a remarkable ability to bring future products into the present, maintaining a significant lead over its rivals. Through their creativity and innovation, Apple consistently introduces products that redefine the market, effectively placing them ahead of their competitors.
Furthermore, Apple’s commitment to producing high-quality products has been a hallmark of the brand. The company’s dedication to superior design and flawless performance is evident in its product lineup. Apple’s designers strive to create products that are better than anything else available in the market. If they cannot achieve that, they simply won’t pursue it. This unwavering focus on quality has allowed Apple to expand beyond personal computers and dominate various sectors.
Understanding customer needs and seamlessly integrating into their lives has also played a pivotal role in Apple’s success. By prioritizing user experience and offering user-friendly products, Apple has built a strong connection with its audience. Apple’s products provide a sense of fulfilment and belonging to their users, with limited choices and minimal complications. The brand has fostered a legacy of trust, with customers willing to pay a premium for anything bearing the Apple logo.
Apple remains committed to its core values, and any deviations from these principles have been accompanied by substantial consequences. Presently, the company derives 52% of its revenue from iPhone sales, while an additional 19% is generated from its services. The remaining 19% is contributed by Macs, wearables, and iPads. By venturing into various sectors while maintaining its fundamental values, Apple continues to enjoy the benefits of its courageous endeavours.
Defying critics and surpassing Wall Street expectations
While Apple enjoys a large following and high brand loyalty, it has faced criticism for its labour practices among contractors, environmental practices, and business ethics, including allegations of anti-competitive behaviour and materials sourcing. Nonetheless, the company maintains its status as one of the world’s most valuable brands.
In 2023, Apple has experienced a surge of 49% in its stock, joining several other highly valued companies on Wall Street. This rally has been fuelled by the belief that the Federal Reserve is approaching the end of its interest rate hike campaign, as well as optimism surrounding the potential of artificial intelligence.
Despite a decline in revenue and profits according to Apple’s most recent quarterly report, the results surpassed analysts’ expectations. This, combined with Apple’s consistent track record of engaging in stock buybacks, has further solidified the company’s reputation as a secure investment option amidst the prevailing global economic uncertainty.
Art Hogan, the chief market strategist at B. Riley Wealth, highlighted Apple’s exceptional qualities as a publicly traded company. He praised its continuous growth, diversification of revenue streams, shareholder-friendly management, stock buybacks, dividend payouts, and strong balance sheet with robust and defendable cash flows.
Apple’s achievement of reaching a $3 trillion market valuation follows the launch of its costly augmented-reality headset on June 5. This venture represents Apple’s riskiest bet since the introduction of the iPhone over a decade ago. Since the launch, Apple’s stock has risen by approximately 7%, surpassing the 4% increase of the S&P 500.
The recent gains in Apple’s shares have surpassed analysts’ predictions for the company’s future earnings. Currently, Apple is trading at over 29 times expected earnings, the highest since January 2022, according to Refinitiv data. In comparison, the S&P 500 technology index has a median price-to-earnings ratio of around 13.
Apart from Apple, four other U.S. companies boast valuations surpassing $1 trillion, namely Alphabet Inc, Amazon.com Inc, Nvidia, and Microsoft Corp. Microsoft follows Apple with a market value of $2.5 trillion.
Throughout this year, Tesla and Meta Platforms Inc have more than doubled their stock prices, while Nvidia has experienced a 190% gain, propelling the chipmaker into the trillion-dollar club.