Forget about the “trillion dollar club.” Apple (NASDAQ:AAPL) has created a new club of its own, the “$3 trillion dollar club.” With its recent move to prices above $190 per share, AAPL stock now has a market capitalization exceeding $3 trillion.
However, after reaching such a lofty valuation, the question now is whether shares in the tech giant can not only stay in this newly created “club,” but continue to climb higher, in both the near-term and the long-term.
In the immediate future, it’s very possible that shares will soon encounter some resistance. The overall stock market could also enter a pullback, which would likely affect AAPL as well.
Still, there is a catalyst that could enable it to add to its latest gains. Over a long time frame, adding trillions more to its valuation may prove easier to achieve than it sounds.
AAPL Stock in the Short-Term: The Bear and Bull Cases
At a valuation of around $3 trillion, not only is Apple the largest stock in the world by market cap. Shares are leaps and bounds (valuation-wise) above other trillion dollar stocks.
The only one that comes even close is Microsoft (NASDAQ:MSFT), with its current valuation of around $2.5 trillion.
That said, I wouldn’t take this big valuation lead to mean that AAPL stock will stay resilient in the near term. As mentioned above, market volatility may knock shares lower.
Although stocks appear to be continuing to re-enter “bull market territory,” keep in mind that issues like high inflation and rising interest rates haven’t fully gone away just yet. The next moves from the Federal Reserve will likely determine whether this nascent bull market continues.
Then again, while AAPL may not be unsinkable, it’s not as if shares could only go lower from here in the near-term. In large part, because there is a strong near-term growth catalyst on the horizon. As I recently discussed, Apple is expected to release a new iPhone this fall. Between now and then, investors could bid up shares, in anticipation of strong Q4 2023 results.
Runway in the Trillions
Whether you have held AAPL stock for quite some time, or are mulling a purchase today, you may find it reassuring that there’s something in play to enable shares to sustain (and add to) recent gains.
However, instead of focusing too much on the near-term, keep your eye on the long-term, when deciding whether to enter a position in Apple stock.
While shares could keep climbing at a modest pace in the months ahead, price moves for the stock in the years ahead could be very substantial.
More skeptical investors may think Apple’s days of high growth and returns are behind it, but while creating trillions more in value isn’t guaranteed, it’s not an insurmountable challenge for this company.
As Morgan Stanley analyst Erik Woodring argued back in March, there are numerous growth catalysts on tap with AAPL.
These include a re-acceleration of growth at Apple’s Services unit, plus the potential launch of a hardware subscription service. That’s not all. A move into emerging markets like India could help Apple’s hardware business sustain elevated levels of revenue/earnings growth.
Apple’s budding AR/VR device business could also someday generate tens of billions in annual revenue.
Don’t get me wrong. Apple’s rise to a market cap exceeding $3 trillion is quite an achievement. Yet, hitting this valuation milestone doesn’t strengthen or weaken the long-term bull case for the stock.
Fortunately, the aforementioned catalysts for the stock point to shares, over a long time frame, staying on an upwards trajectory.
Assuming the stock can keep trading at its current earnings multiple, all Apple needs to do to hit $4 trillion is grow earnings by 33.3%.
Based on some sell-side earnings forecasts, the company could achieve this within two years. Over a 5-10 ten year period, continued double-digit earnings growth could add trillions more to AAPL’s valuation.
With this in mind, if you are a long-term growth investor, feel free to enter/add to a position in AAPL stock.
AAPL stock earns a B rating in Portfolio Grader.
On the date of publication, Louis Navellier had a long position in MSFT. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.