If Apple were a country and its market value was nominal GDP, it would rank 18th in the world, above the Netherlands and just below Turkey. This record-breaking tear, which has seen Apple stock soar by 29 percent this year, is despite the company issuing what was seen by many analysts as a lackluster earnings report, about $1 billion below the consensus forecast.
In fact, Apple underperformed the S&P 500 from March 2015 through April 2017 by 2%. The markets are betting on the company’s fundamentals, and an iPhone 8 launch, to bolster its value. Plus, Apple has always been a master at reinventing itself faster than its giant competitors.
Jim Cramer interviewed Tim Cook last week after earnings and Jim made an interesting point worth noting: The tech giants of the late 1990s, all took 15-17 years to recreate their businesses from PC-centric models to the Cloud, social, mobile and now AR/VR and Cognitive are the new realities. Some couldn’t do it at all.
Cramer’s point – which I thought was very valid – was that Apple is using the success of the iPhone and the Hardware business to recreate the business model NOW, and by that is meant the growth in Services, which was 13% of Apple’s total revenue this past quarter as well as things like Apple Auto (if that comes to fruition) and Apple Watch.
The Apple Watch (in my opinion) was a way to attack the healthcare vertical, and Tim Cook briefly mentioned that in the interview last week, and it seems to be in its early iterations, and with more in-depth development to come. Fitbit (NYSE:FIT) and so many other wearable devices won’t be able to compete with iOS and Apple’s operating system, which will eventually tie everything together.
It is hard to believe that a $770 billion market cap company can reinvent itself on the fly but that is what Apple is doing and doing successfully thus far.
With a cash hoard of $256.8 billion–more than the market cap of General Electric–Apple has plenty of options as to what it wants to be when it grows up. For now, there’s no other company in its league (Alphabet/Google is under $700 billion, and don’t ask about Microsoft). Apple is playing on a field all its own.