Apple (APPL) expects iPhone maker to reach $ 3 trillion market cap in 2022

Apple (APPL) expects iPhone maker to reach $ 3 trillion market cap in 2022

Various models of Apple Inc.’s iPad in the company’s Yeouido store when it opens in Seoul, South Korea on Friday, February 26, 2021.

Jean Chung | Bloomberg | Getty Images

Apple could reach a market cap of $ 3 trillion in 2022, according to Wedbush analyst Dan Ives, who is bullish on the tech giant.

Shares of the iPhone maker are down about 5% year-to-date. Earlier this year, investors emptied the company’s shares after a historic quarter in December.

Apple is the world’s most valuable company with a current market capitalization of approximately $ 2.1 trillion. He crossed the first trillion in 2018 and the $ 2,000 billion in 2020. Analysts, including Ives, have previously spoken of Apple’s roadmap to reaching the record $ 3 trillion.

“We’re finally thinking in 12 to 18 months,” Ives told CNBC.Asia street signs“Tuesday when asked about a possible timetable for the next step.

“If you look at innovation, if you look at the supercycle in the service industry right now, I think this is sort of the next stage of growth, ”Ives said, adding that this would prove to skeptics that Apple remains focused on innovation.

In late April, Ives raised Apple’s price target from $ 175 per share to $ 185, maintaining an outperformance rating on the stock. Apple shares closed at $ 125.90 per share during normal trading hours on Monday.

Software services

Apple has been considered a computer hardware company for years as CEO Tim cook pushed the narrative that the company’s iOS operating system has an ecosystem of services – built around a base of over a billion device users – that’s a big part of his future.

But the mix of hardware and software has evolved and in 2020 the tech giant received its greatest support from Wall Street and investors.

Ives currently assesses Apple’s software services business at around $ 1 trillion and expects it to grow to around $ 1.5 trillion for the company’s market value to reach $ 3 trillion. dollars.

“They put an iron fence around their base, continue to monetize it, and bears and skeptics will continue to doubt them,” he said.

He said Apple continued to “prove them wrong”. He added: “That’s why when I look around the corner, despite this period of digestion, I see a market cap of $ 3 trillion (in) 2022.”

At its World Developer Conference, or WWDC, on Monday, the the company presented a slew of new updates for major Apple products. It included iOS 15 – the latest version of the iPhone operating system.

New iPhones are also expected later this year, while a Apple Car is also in the works.

Ives said that right now, Apple is laying the groundwork for the next stage of growth where software and services play an important role.

Risks to the $ 3 trillion goal

According to Ives, several potential risks could prevent Apple from reaching the historic market cap of $ 3 trillion.

They include a legal battle with Epic Games, creator of the famous Fortnite video game, where Cook faced acute questioning from the judge last month.

Apple last year removed Fortnite from its iPhone App Store, claiming the game violated its guidelines for its software distribution platform. Epic Games responded by filing a trial within hours, accusing Apple of anti-competitive behavior. Apple then filed counterclaims and responses, claiming damages for breach of contract with Epic Games.

Ives also highlighted the increase in regulatory oversight around the world. the The European Commission said in April that the iPhone maker “abused its dominant position” in the distribution of music streaming applications through its Apps Store.

CNBC’s Eric Rosenbaum contributed to this report.

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