Apple becomes world's first $3trillion company amid shift to service-based revenues
Apple has briefly become the first company to hit a stock market valuation of $3trillion after the US tech giant’s pivot to a privacy-centric ad strategy last year.
In comparison, Microsoft is now worth about $2.5trillion (£1.8trillion), while Alphabet, Amazon and Tesla have market values above $1trillion, while Meta (Facebook) falls just below the trillion dollar mark for valuation.
On the first day of trading in 2022, the Apple’s shares briefly hit a record of $182.88 around midday on Monday. The stock later pulled back from that level, closing 2.5 percent higher at $182.01.
However, its value then slipped to end Monday's trading session in New York at $2.99trillion.
A shift to digital services and platforms
Investors have bet that consumers will continue to shell out for iPhones, MacBooks and services such as Apple TV and Apple Music, highlighting how the pandemic has stoked demand for personal electronics and digital services.
In fact, services could now make up almost a half of all the tech giant’s current value. Last week, Daniel Ives, MD of investment firm Wedbush, said in an investor note that Apple’s services business could be worth $1.5 trillion:
"The linchpin to Apple’s valuation re-rating remains its Services business which we believe is worth $1.5trillion in the eyes of the Street, coupled by its flagship hardware ecosystem which is in the midst of its strongest product cycle in over a decade led by iPhone 13. The Services business is further monetising the Apple golden installed base and poised to reach $100 billion+ annual revenue by 2024."
The rapid embrace of technologies such as 5G, VR and AI has also helped these stocks become market darlings as investors move towards cash-rich companies and away from businesses that have been more sensitive to economic growth.
Embracing a privacy-centric future
The achievement comes on the back of a year when Apple shook up the performance marketing sector, with new privacy-centric opt-ins for users on its latest operating system.
Apple iOS 15 presented users with the choice to opt out of personalised ads when opening the Apple App Store or Stock applications. This was the first time that Apple has granted such permission to users.
The move came after a raft of updates designed to give users more say in how their data is used, while allowing advertisers to serve targeted ads in a more privacy-centric way.
One of the new features of iOS 15 is iCloud Private Relay, which offers an extra layer of security that protects users’ privacy while browsing the web.
With this option enabled, the user’s real IP address is not shown to third-party servers so that they cannot track them across the web (known as ‘fingerprinting’).
Apple is aiming to build upon its success in 2022, with new Macs, a redesigned iPad Pro, a rugged version of the Apple Watch, second-generation AirPods Pro, and an AR/VR headset focused on gaming.