Markets paused after Apple touched $180 last week. The three trillion market capitalization is an inevitable milestone for Apple. Whether it crosses it or not is symbolic. The Apple platform, products, and services have high margins. The stock’s profit growth is in contrast to much of the speculative technology index.
This profit divergence suggests that Apple has continued upside for the year ahead.
Apple’s iPhone 13 refresh is incremental and unexciting. The update may offer no hype but users have no alternatives. The device has better cameras, a battery, a body, and a chip processor. Most importantly, the packaging is barebones. It includes only a USB-C cable and no adaptor. With the higher unit price, this will lift profits, as long as demand exceeds supply.
The smartphone and tech industry faces a supply shortage. This will prevent Apple from over-producing devices. Consumers have to pay a higher price as the Android alternative is not any cheaper. Apple does not face pricing pressure. So, as users stay on the platform, revenue from the firm’s Apple TV, app store, music store, and peripherals will expand.
Investors who held AAPL stock should not sell. Technology stocks are expensive. Apple stock is still at a relative discount.
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