On June 30, Apple Inc achieved a significant milestone as its stock market value exceeded $3 trillion for the first time. The surge in value can be attributed to positive signs of improving inflation and investor confidence in Apple's ability to expand into new markets successfully.
Shares of the tech giant rose by 2.3% to reach $193.97, resulting in a market capitalization of $3.05 trillion, according to Refinitiv data. This marks Apple's fourth consecutive record high close. Although Apple briefly reached a market capitalization above $3 trillion in intraday trading on January 3, 2022, it closed that session just below the significant milestone. The recent rally in Apple's stock, along with other heavyweight growth companies like Nvidia Corp and Tesla Inc, followed a Commerce Department report showing a smaller increase in the Personal Consumption Expenditure price index for May compared to April. This reflects the progress made by the Federal Reserve in its battle against inflation. In 2023 alone, Apple's stock has surged by 49%, aligning with the rally of other valuable companies on Wall Street. This growth has been fueled by expectations that the Federal Reserve is nearing the end of its interest rate hikes and optimism surrounding the potential of artificial intelligence. Despite Apple's most recent quarterly report in May revealing a decline in revenue and profits, the results still exceeded analysts' expectations. Coupled with its consistent stock buybacks, these financial results have solidified Apple's reputation as a safe investment during times of global economic uncertainty. Art Hogan, chief market strategist at B. Riley Wealth, praised Apple, stating, "It's a testament to one of the greatest publicly traded companies that's ever existed. It continues to grow and diversify its revenue streams, has shareholder-friendly management, buys back shares, throws off a dividend, and has a fortress balance sheet with strong and defendable cash flows." Apple's achievement of the $3 trillion milestone comes shortly after the release of its costly augmented-reality headset on June 5. This represents the company's riskiest venture since the introduction of the iPhone over a decade ago. Since the launch, Apple's stock has risen approximately 7%, outperforming the 4% increase of the S&P 500. The recent surge in Apple's shares has surpassed analysts' expectations for the company's future earnings. The stock is currently trading at over 29 times its 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 about 13. Apart from Apple, four other U.S. companies have market valuations exceeding $1 trillion, including Alphabet Inc, Amazon.com Inc, Nvidia, and Microsoft Corp. Microsoft follows Apple closely with a market value of $2.5 trillion. While shares of Tesla and Meta Platforms Inc have more than doubled this year, Nvidia's shares have skyrocketed by 190%, propelling the chipmaker into the trillion-dollar club.
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