Apple’s valuation puts it ahead of Amazon and Microsoft, which are both valued at around $1.6tn
On Wednesday (19 August), Apple briefly became the first US company to be valued at $2trn after shares climbed 1.4pc to $468.65 in midday trading. Shared later declined and finished the day flat.
The news comes just two years after the company reached a $1trn valuation – a feat that took the company 42 years. Apple has now doubled the value it reached in 2018, during a time when the global economy is shrinking.
The only other company to have reached a $2trn valuation is Saudi Aramco, a state-backed Saudi Arabian oil company that achieved the valuation after listing its shares in December 2019. Since then, Saudi Aramco’s valuation has dropped back down to around $1.8trn, allowing Apple to surpass it and become the world’s most valuable traded company.
In the US, Microsoft and Amazon trail behind Apple, each with a valuation of around $1.6trn. As detailed by the New York Times, the pandemic has been a “bonanza” for tech companies, with stocks soaring despite the wider economic situation.
Aswath Damodaran, a New York University finance professor, told the New York Times that the crisis has “strengthened what was an already strong hand” for the giants of the tech sector.
What’s driving Apple’s success?
Throughout 2020, Apple has faced a number of challenges including supply chain issues as a result of the Covid-19 pandemic and increased antitrust scrutiny in the US and Europe. But shares have jumped more than 50pc this year.
Apple’s earnings report from Q2 of 2020 highlighted an 11pc increase in revenue on the same quarter last year. Apple reached revenue of $59.7bn, with international sales accounting for 60pc of that.
CEO Tim Cook said that this was driven by double-digit growth in both products and services, with the company seeing strong performances in its wearables division, likely spurred on by the increase in people exercising at home during the pandemic. The company also saw strong demand for iPhones, Macs and iPads during the same period.
Paolo Pescatore, a technology analyst at PP Foresight, told the BBC: “The last few months have underlined the importance of users and households alike to own better quality devices, connections and services, and with Apple’s strong broad portfolio of devices and a growing services offering, there are plentiful opportunities for future growth.”
Pescatore described Apple’s latest valuation as “an impressive feat” and said that the arrival of gigabit broadband could provide Apple’s business with “endless possibilities” in terms of new products, services and revenue sources.