Tech firms in general, and more so Big Tech, have often been labeled as the winners of the ongoing coronavirus pandemic. Aided by the nature of their products and services, and the ability for staff to work from home “forever,” many of these firms having seen their stock rise over the past few weeks. At the forefront of this has been none other than Apple.
Yesterday, the US company saw its market capitalization cross the $1.5 trillion threshold, the first US company in history to do so. Essentially, market capitalization is calculated by multiplying the current share price by the number of outstanding shares. Apple’s shares are currently trading at around $350, having risen nearly 10% since the start of June in an industry-wide rally.
This rally is seen as the outcome of easing restrictions globally, as the world attempts to return to a ‘new normal’ where we learn to coexist with the virus, after a drop off in stocks in mid-March as the pandemic was inducing market panic. Additionally, the Apple-specific gain of recent days is attributed by investors to the “anticipation of the launch of a 5G iPhone this fall, signs of strong App Store sales, and interest in the potential of ARM-driven Macs, based on a Bloomberg report yesterday that said Apple may announce an ARM transition at its annual developer conference later this month,” tech news site Ars Technica explains.
Over the past few quarters, the iPhone, originally Apple’s main breadwinner, had been accounting for less and less of the company’s overall revenue, as services like Apple Music began to take center stage. We’ve previously written about this on a few occasions, as we’ve witnessed Apple continue to diversify its portfolio of products and services.
For its latest earnings report, Q2 2020 released at the end of April, Apple reported that its iPhone revenue was down 7% year over year, though that was partially covered by a 16% rise in services revenue. Total revenue growth for the quarter decreased to 0.5% from 9% one quarter ago, according to CNBC. However, a lot of this data should not be taken as the norm as these figures have been colored significantly by the exceptional influence of COVID-19.
Currently, there remain fears across the market of a second wave of infections potentially triggered by the ongoing reopening. As such, it is not yet clear how long this bump in shar value will last for Apple and other tech firms. The fact that Apple attained this achievement during such trying time is an achievement of its own, but it could possibly be shortlived.
The first time Apple’s market cap reached $1 trillion was in August 2018. At the time, it was the first US company to cross this milestone, followed by Amazon in second place, Microsoft in third place, and Google parent-company Alphabet in fourth place. Since 2018, Apple fell off its throne before reclaiming it again in 2019, and now, it is the first to make history once more. Currently, the only company in the world to have crossed the $1.5 trillion mark is oil giant Saudi Aramco, the world’s most valuable company currently valued at over $2 trillion.