Business Technology

Why Apple is on the verge of becoming the first $1 trillion valued company

3 min read

01 August 2018

Tech giant Apple is about to make history, with it being just shy of the magic $1 trillion market valuation. And there's more growth to come thanks to a focus on artificial intelligence.

The group, which could hit the landmark later today when Wall Street begins trading, posted a 17% year on year rise in third quarter revenues to $53.3 billion. Profits rose 32% to $11.5 billion.

Apple said it had sold 41.3 million iPhones over the period to June 30, which was below expectations of 41.8 million. But more demand for its expensive models, such as the iPhone X, helped its figures flourish. Indeed, customers paid, on average, £552 for an iPhone.

Revenues at its services business, which include the App store and Apple Pay, were also strong rocketing 31%.

Its shares rose 4% in after-market trading taking it just shy of the magic $1 trillion market valuation.

“The final lift in the share price required to hit that trillion-dollar level shouldn’t be so tough to achieve after a set of figures like that,” hailed Jasper Lawler, head of research at London Capital Group.

Chris Ford, manager of the Smith & Williamson Artificial Intelligence fund, said Apple was in a race with other tech giants to be the world’s first $1 trillion company.

Alphabet has a market valuation of $887 billion, with Amazon sitting at $877 billion and Microsoft at $842 billion.

But he played down concerns over whether this meant the companies held too much combined power.

“Regulators may fret about the influence of megacaps like Apple and Amazon, but they are not unusual in terms of their size,” he states.

“In 1967, for example, the largest company in the US market was IBM but it was over five times the size of the tenth largest company – Gulf Oil. Apple, Alphabet and Amazon are undoubtedly behemoths, but they do not dwarf the likes of JP Morgan Chase and Johnson & Johnson, which also appear in today’s US top ten.”

He says today’s tech megacaps have been successful because they have embedded themselves in our lives to the point where many people might struggle to function without an iPhone.

“Phones are not just phones – they are intelligent devices – and they are about to become more intelligent due to the power of AI,” he explains.

“What is clear is that businesses are using AI to consolidate what are already strong positions within their existing markets, and these are unlikely to be overtaken any time soon. Which company gets to $1 trillion first is immaterial. However, as far as the future and likely corporate persistence is concerned, the role of AI is anything but.”