For a long time, technology super giant Apple Inc. (NASDAQ:AAPL) has been expected to be the first trillion-dollar firm in the U.S., due in part to the company’s outsized market capitalization and large lead over the other largest stocks on the NASDAQ or NYSE of late.
That being said, Amazon.com, Inc. (NASDAQ:AMZN) has begun to nip at Apple’s heels, crossing the $900-billion valuation mark for the first time in recent trading days. The race toward a $1-trillion valuation may seem trivial to most (both companies are likely to cross the chasm at some point in the near future), but for Apple, indications are that growth may be slowing and long-term innovation in specific product categories may be waning, leading to many believing that share price growth for Apple is more likely to be linked to share buybacks than valuation increase over time.
Apple has retained its status as a share buyback king, continuing to repurchase billions of dollars worth of shares regularly; such moves increase the stock price of a firm necessarily, due to the fact that fewer shares remain outstanding after a buyback, holding everything else constant. While Apple’s valuation has remained relatively "stuck in the mud," investors continue to benefit from buybacks, making the question of whether Apple will be the first trillion dollar company a less important one.
2018 will be an interesting year, and I anticipate either Apple or Amazon crossing the psychological barrier at some point this fiscal year. For Apple investors, the timing matters a lot less due to the financial engineering of the firm’s finance team.
Invest wisely, my friends.
Tech Insider
