Apple Inc (NASDAQ: AAPL), the Cupertino-based technology giant, has crossed a colossal milestone by surpassing a US$3 trillion market capitalisation.
The world’s most valuable company has seen an impressive year so far, with a gain of 67.4% year-to-date (ytd).
This reflects the company’s consistent growth and strong investor confidence.
From the launch of its first personal computer, the Apple I, in 1976, to the unveiling of the revolutionary iPhone in 2007 and then to the record-breaking US$3 trillion market cap in 2023, Apple has proven itself as an exemplar of innovation, design, and customer experience.
Now that Apple has reached a valuation that is bigger than France’s economy and double the size of India’s entire stock market, what’s next for the tech giant and its investors?
Doubling down on services
One of the most successful drivers of Apple’s growth has been its ever-expanding portfolio of services, which includes iCloud, Apple Music, Apple TV+, Apple Arcade, and the newer Apple Fitness+.
The company has managed to transition from a primarily hardware-focused business to one where services significantly contribute to the bottom line.
With a strong ecosystem that ties its loyal customers to its expanding services, Apple is likely to see services become an even more important business segment for the company in the near term.
I believe that Apple will double down on this successful strategy, expanding its existing service offerings and introducing new ones.
We have seen Apple creating more original content for Apple TV+ in recent times and with the rise of Artificial Intelligence (AI), I believe there will be enhanced cloud-based offerings for both consumers and businesses that leverage on its strong ecosystem.
Innovation in hardware
Although the services segment is growing, Apple’s hardware continues to be an important part of the company’s overall business strategy.
The iPhone, iPad, Mac, and Apple Watch have all continued to dominate their respective markets.
Apple has recently ended ties with Intel Corporation (NASDAQ: INTC) and designed its own chips for Macbooks and Mac Minis.
With its home-grown chips, this gives Apple more control over the development of the PC market as it aims to redefine the future of the PC.
Aside from that, Apple has also unveiled its Vision Pro augmented reality (AR) headsets, paving the way for the iPhone maker to enter the AR and Virtual Reality market – which is estimated to be worth US$31 billion.
While new product categories will take time to generate substantial revenue for Apple, I believe Apple’s hardware division will continue to innovate at an aggressive pace.
There are many possibilities here, ranging from advances in processing power, battery life, and display technology, all of which can improve the consumer’s user experience.
The big bet on privacy
Privacy has been a significant focus area for Apple over the last few years.
The company has positioned itself as a champion of consumer privacy, setting it apart from many of its big tech competitors.
With increasing global scrutiny of data handling practices by tech giants, Apple’s commitment to privacy might not just be a unique selling point but a crucial element in future growth.
During Apple’s Worldwide Development Conference (WWDC), the company announced some of their latest privacy and security enhancements.
Apple is also looking at introducing AI protection against some of the dangers created by AI such as deepfakes.
Fintech ambition
Apple is also making inroads into the financial services industry.
This year, Apple has expanded its financial services, adding a high-yield savings account for Apple Card users to its portfolio, which includes Apple Pay, Apple Card, and a buy now, pay later (BNPL) service.
The savings account offers a competitive 4.15% annual percentage yield (APY), with no fees or minimum deposits, making it a compelling proposition for Apple Card’s satisfied user base.
Apple’s continuous additions to its financial services underline the company’s commitment to this sector.
The rise of digital payments and e-commerce will also benefit Apple in the long-term as the tech giant position itself to capitalise on the profitable prospects of its fintech ambition.
The next chapter of Apple’s growth will be challenging
The company’s trajectory is promising as Apple steps into the future with a market cap exceeding US$3 trillion.
By leveraging its strengths in service offerings, continuing hardware innovation, exploring new technology frontiers, emphasising privacy, and focusing on sustainability, Apple is poised for an exciting and transformative period in its illustrious history.
With a reputation for surprising its customers, industry, and investors alike, it is no wonder that Apple is trading at a premium valuation.
However, investors should be cautious with its lofty valuation considering the current economic uncertainties globally.
The road ahead is likely to be filled with more challenges as well, given the exciting new technology frontiers and uncertainties brought about by the rise of AI.
As with any investment, it is crucial to do thorough research and consider one’s risk tolerance and investment horizon before making a decision.
Nonetheless, based on past performance and future projections, Apple’s stock appears well-positioned to reward patient investors who have a long-term perspective.
Disclaimer: ProsperUs Investment Coach Billy Toh doesn’t own shares of any companies mentioned.
