Tag Archives: Trillion
There seems to be some mysterious force that keeps stocks from holding on to trillion-dollar market caps. Only three months after Apple made history by becoming the first U.S. stock ever to be worth $ 1 trillion, the stock closed Monday below that milestone level.
Apple’s stock first surpassed the $ 1 trillion mark on Aug. 2 and has held above that level since then. According to Nasdaq, Apple has 4.83 billion shares outstanding. On Monday, Apple’s stock closed at $ 201.59 a share, 2.9% below its official closing price last week and low enough to give Apple a net value of $ 974.5 billion.
Apple made stock history by becoming the first U.S. company and the second company overall (after China’s Petrochina) to attain a market value of $ 1 trillion. Amazon briefly joined Apple into that elite club but has since lost more than 20% of its value.
Amazon’s market value rose above the $ 1 trillion level on Sept. 4, then dropped back below the following day. Since then, Amazon has continued to fall in part on concerns about a slower holiday season this year.
Petrochina, the first global member of the trillion-dollar club, reached that level on its first day of trading after its 2007 IPO. But that peak coincided with a Chinese stock-market bubble, and PetroChina’s shares would lose $ 800 billion in value over the next 10 years.
Apple’s stock began declining last Thursday, after the company warned investors that its holiday sales could come in below Wall Street forecasts. In the current quarter, Apple said its revenue would come in between $ 89 billion and $ 93 billion. Analysts had forecast revenue of $ 93 billion.
That may not be more than a speed bump for Apple as it pushes to sell more iPhones and other devices, along with a growing business in services, like Apple Music and the App Store, to help revenue and profit grow in coming years. Still, not long ago, the U.S. stock market had two trillion-dollar stars.
As of Monday’s close, it has none.
SAN FRANCISCO (Reuters) – Apple is on the verge of becoming the first $ 1 trillion publicly listed U.S. company, but even if it gets there, it could soon be overtaken as Amazon.com surges from behind.
Started in the garage of co-founder Steve Jobs in 1976, the iPhone maker’s annual revenue has ballooned to $ 229 billion, greater than the gross domestic product of countries including Portugal and New Zealand.
(Big Tech Rev vs Countries’ GDP: reut.rs/2ry9qr6)
Apple’s market capitalization on Thursday topped a record $ 934 billion, following its unveiling last week of a $ 100 billion buyback budget and news that Warren Buffett’s Berkshire Hathaway dramatically increased its stake in the company.
Thanks to a 12 percent rally since its quarterly report last Tuesday, the Cupertino, California company is just 8 percent short of hitting the $ 1 trillion valuation mark.
Pointing to Apple’s recent 31 percent jump in service revenue, including music streaming and online storage, CFRA analyst Angelo Zino on Wednesday upped his target price for the stock from $ 195 to $ 210, which would put Apple’s market capitalization at $ 1.03 trillion. Zino joins at least 12 other analysts with price targets putting Apple’s stock market value at 13 digits.
But Apple is in danger of being beaten to the $ 1 trillion mark – or passed soon after – by Amazon.com, the second largest listed U.S. company by market value, at $ 780 billion.
Saudi Arabian authorities, meanwhile, have said they expect a planned international initial public offering of Saudi Aramco that would value the national oil producer at about $ 2 trillion.
While $ 148 billion smaller than Apple on Friday, Amazon of late has expanded its stock price, and its sales, much more quickly than Apple. Amazon’s stock is red hot, trading recently at over 100 times expected earnings, compared to more-profitable – but slower growing – Apple’s valuation of 15 times earnings.
(Big Tech PEs:reut.rs/2wsd0YU )
Apple’s stock has risen 24 percent over the past year, fueled by optimism about the iPhone X, the company’s latest smartphone. But demand for the $ 1,000 device has underwhelmed investors, and bulls are now focused on Apple’s plan to return more cash to shareholders.
By comparison, Amazon’s stock has surged 70 percent over the past 12 months, bolstered by 31 percent revenue growth as more shopping moves online and businesses shift their IT departments to the cloud, where Amazon Web Services leads the market.
Amazon is also competing more with Apple and Google owner Alphabet as it sells music and video content, its Fire TV device and its Alexa smart home gadget.
(Big Tech Revenue: reut.rs/2wyZaE4 )
At $ 765 billion, Alphabet has the third largest market capitalization on Wall Street, with Microsoft close behind at $ 749 billion. Amazon breezed past both them both in February.
(Long-Term Market Cap:reut.rs/2rzCGxD )
Including Facebook, the five largest listed U.S. companies now account for 15 percent of the S&P 500’s $ 24 trillion market capitalization.
(Big Tech’s Outsized Weight in S&P 500: reut.rs/2rwBTOc)
To be sure, past stock gains are not a reliable predictor of future performance, and the surge in Apple’s and Amazon’s shares in recent years has been exceptional by most standards.
But if Apple’s stock were to keep growing at the pace seen over the past year, the company’s market capitalization would hit $ 1 trillion in September. Amazon would reach $ 1 trillion around October if its stock price continued to rise at the same rate as the past year, and overtake Apple soon after.
Extending forward their own one-year performances, Microsoft would not reach $ 1 trillion until early 2019, and Alphabet would take until 2020.
(Race to $ 1 Trillion Market Cap:reut.rs/2rz4WAJ )
Most Wall Street analysts are less optimistic. The mean analyst price target puts Apple’s stock 6 percent above current levels at $ 200 within the next 12 months, which would elevate its market capitalization to $ 983 billion, according to Thomson Reuters data.
The mean price target of analysts covering Amazon is $ 1,850, a 15 percent premium over its current price, which would give it a market value of $ 898 billion. Analysts target Microsoft to rise 12 percent to reach $ 845 billion, and for Alphabet’s market value to increase 16 percent to $ 884 billion.
(Big Tech Analyst Price Targets:reut.rs/2wv224H )
Reporting by Noel Randewich, Editing by Rosalba O’Brien
The race to become the first public U.S. company valued at $ 1 trillion has largely been seen as Apple versus Google, with a recent surge by Amazon putting the e-commerce giant in the conversation as well. But on Monday, analysts at Morgan Stanley made the case that Microsoft has a good chance of reaching the $ 1 trillion mark.
With the company’s shares trading around $ 87 at Friday’s close, Microsoft had a stock market value of $ 680 billion. To reach $ 1 trillion, with some stock buybacks in the mix, its shares would have to hit almost $ 130. That’s plausible within the next three years, Morgan Stanley analysts Keith Weiss and Melissa Franchi wrote on Monday in a detailed report on Microsoft’s various lines of business called “Plotting the Path to $ 1 Trillion.”
“With Public Cloud adoption expected to grow from 21% of workloads today to 44% in the next three years, Microsoft looks poised to maintain a dominant position in a public cloud market we expect to more than double in size to (more than) $ 250 billion dollars,” the analysts wrote.
Microsoft shares jumped 5% to $ 91.90 in midday trading on Monday after the report came out. With a midday market cap of $ 707 billion, Microsoft almost exactly tied Google (goog) and trailed only Apple (aapl) at almost $ 849 billion and Amazon (amzn) at $ 733 billion.
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The software company run by Satya Nadella could impress investors enough to reach a $ 1 trillion value within three years by increasing revenue to $ 136 billion in its fiscal year 2020, up 41% from $ 97 billion last year, and operating income to $ 46 billion, up 58% from $ 29 billion, the Morgan Stanley analysts forecast. Nadella took over for CEO Steve Ballmer in 2014 and immediately prioritized the company’s cloud businesses, while getting out of distracting sidelines like making phones. It has worked so far, with Microsoft’s stock price nearly tripling since Nadella assumed the top job.
The key to reaching the needed level of additional growth would be Microsoft’s booming cloud business, both via its Office 365 subscription software and its Azure cloud platform for businesses, analysts Weiss and Franchi wrote. At the same time, shrinking sales of traditional Windows PCs and servers would need to stabilize.
That could happen as the number of corporate users of Office 365 could almost double from 105 million at the end of 2017 to 204 million at the end of 2020, the analysts said, with revenue from the popular software subscription package increasing from $ 10.7 billion to $ 25.6 billion. Revenue will compound even more quickly at Azure, growing from $ 3.9 billion last year to $ 21.6 billion in 2020. Altogether, total cloud revenue at Microsoft—which includes Office 365, Azure, search ad revenue and a few other items—should grow from $ 22.3 billion last year to $ 58.5 billion in 2020.
The analysts warned that they could also be underestimating Microsoft’s (msft) growth if its Xbox gaming business expands faster than expected, the company’s tax rate drops more than Microsoft forecast, or the company increases purchases of its own stock.
In the first official U.S. visit of China’s President Xi Jinping this week, nothing speaks louder than one single photo on China’s hopes for its high-tech diplomacy.