What did Apple do to reach a market capitalization of $3 trillion?

Tim Cook and Apple make history with a $3 trillion market capitalization.

When Apple's market capitalization surpassed $3 trillion on June 30th, the iPhone maker achieved something remarkable. The company recorded revenue declines for two consecutive quarters and predicted a repeat this quarter. In February, for the first time in nearly seven years, Apple failed to meet its revenue target. Meanwhile, the highly anticipated Vision Pro glasses won't be available until 2024, and their sales remain uncertain.

Despite unfavorable circumstances, Apple's stock has risen 53% in the first half of this year. With ample cash reserves and a booming services sector, the company has thrived despite rising interest rates. With the worst of the economic downturn seemingly behind us, the American tech giant is poised for a strong recovery.

Of all the factors that played a role in Apple's rise, cash was perhaps the most important. With interest rates rising from 0 to over 5%, profits were worth more than empty promises. Apple accumulated over $100 billion in cash and used it wisely. In May, it announced a $90 billion stock buyback – its second in two years. This set it apart from other tech companies struggling with profitability.

Speaking to Bloomberg, portfolio manager Patrick Burton said that in his career, he never imagined a company the size of Apple. Furthermore, he never envisioned a company capable of generating over $100 billion in free cash flow in a single year. On June 29th, analyst Atif Malik predicted Apple's stock price could rise nearly 30% to $240.

To maintain its $3 trillion revenue milestone, Apple will have to demonstrate sales growth or continue its share buyback program. However, they have already proven strength in their iPhone and services businesses. Even with Mac sales down 31% and iPad sales down nearly 13% in the most recent quarter, iPhone revenue still increased 2%, exceeding expectations by almost $2.5 billion. Services contribute 22% of the company's total revenue, larger than any other product category except the iPhone. With the iPhone 15 about to be released, a major upgrade cycle may be about to begin.

Apple briefly touched the $3 trillion mark in January 2022 but couldn't sustain it. Rising inflation and signals from the Fed about aggressive interest rate hikes impacted risky assets like stocks. Apple also fell victim to the Covid-19 pandemic, with supply chain disruptions costing them billions of dollars. However, the supply chain is gradually recovering, and the Fed appears to be nearing the end of its interest rate hikes. The near future looks brighter.

Currently, Apple is a safe haven for investors looking to deposit money regardless of quarterly earnings. To continue growing, the company will have to prove its long-term bets – Vision Pro and its car project – are paying off.

(According to Slate)

Vietnam is increasingly gaining a foothold in Apple's supply chain . Apple's vast supply chain in China continues to undergo changes as a major contractor opens a factory in Vietnam, and some MacBook production lines shift to Thailand.

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