Just as Tesla stock rose on the stock split news, Apple (NASDAQ:AAPL) shares rallied to a market cap of over $2.1 trillion. It is now up 34% on the month and 8% in the last week. The smartphone supplier now trades at a price-to-earnings above that of Microsoft (NASDAQ:MSFT). Does that make sense? Will Apple stock ever fall?
Investor sentiment is at all-time highs for Apple. The company does not even have a 5G smartphone on the market yet. Even Motorola and Samsung have 5G devices. Still, Apple does not need to rush the release when the latest line-up is more than its customers need. Plus, the iPhone SE covers the budget to the mainstream crowd, limiting any market share losses ahead.
Software and Subscriptions
Apple TV+ is probably losing money, just as Netflix hardly earns a profit as it takes on debt to buy content. Yet Apple needs to build its audience every quarter. Eventually, the larger audience will give Apple the leverage to generate advertising fees and higher gross margins on the content it buys. The TV unit will also diversify the business profit reliance from device sales and the Apple App Store. When Epic Games is suing it for anti-competitive behavior, Apple TV+ cannot grow fast enough.
