Apple has become the first U.S.-based company to reach a market value of $1 trillion and other tech giants like Amazon are Google are quickly catching up.
The Trillion-Dollar Club
If you’re on a 401(k) retirement plan, your funds probably include stocks from the famous tech company Apple, which has become the first publically traded U.S.-based company to achieve a market capitalization of $1 trillion.
The impressive milestone was announced on Thursday following the company extraordinary history of delivering innovative tech products, just as the stock market’s bull run has entered in its 10th year, and will likely overtake the longest bull market of the 1990’s.
The new milestone isn’t just good news for the iPhone-maker but also for the individual investors, who will see a growth in their stocks as Apple’s market cap soars even further. Millions of American workers ranging from lawyers to electricians and teachers own a small stake in the company’s success in the form of stocks.
Apple is also the largest holding in the S&P 500, making up 4 per cent of the stock index’s total weight. Most American workers own the company’s shares through the S&P index fund and other diversified funds in their 401(k) retirement plan. In fact, it is the individual investors in America that have helped the company achieve its latest milestone.
Apple’s Inflence Over the Stock Market
Investment strategist Kate Warne, who works at the St. Louis-based brokerage Edward Jones, says that Apple achievement as the first trillion-dollar U.S. firm is a great reminder that companies which provide unique services or products combined with world-class quality are the real money-makers for investors over time.
Most investment experts including the co-founder of Bespoke Investment Group, Paul Hickey, believe that every working American gains from Apple’s success. If the company’s market capitalization gets a boost, it increases the value of almost every 401(k) since most index and mutual funds have invested heavily in the company.
Chief strategist Christian Thwaites from the California-based wealth management firm, Brouwer & Janachowski, cautions that market’s performance doesn’t depend on one stock, even if it is of a company as significant as Apple. Other factors such as economic fallout due to trade conflicts or high interest rates are huge risks that currently face the broader stock market.
Farr, Miller & Washington’s president Michael Farr says that Apple’s financial milestone shouldn’t be seen as a sign that the stock market has reached its peak. The company joined the trillion-dollar club when its stock prices briefly hit $207.05 just before noon, Thursday.
By the end of the trading day, Apple’s stocks had gained $5.89 in value, bringing the total increase in 2018 to 22.5 percent. In comparison, S&P 500’s returns only rose by 5.7 per cent during the same period.
Other Tech Giants Catching Up
Apple may be the first U.S.-based company to hit the trillion-dollar mark but the feat has already been accomplished by PetroChina, a Chinese oil and gas firm which skyrocketed to $1 trillion in value in November 2007.
Apple’s extremely popular iPhones have played a pivotal role in ensuring the company’s success over the past decade. It’s latest and the most expensive iPhone X costs $999 and was the most popular smartphone of 2018 followed by its smaller iPhone 8 models.
Since S&P 500 stocks are weighted by their market value, Apple’s stock make up the majority of the index and even a smallest change in the company’s share prices can have a dramatic impact on the index’s performance. Erik Davidson, Wells Fargo’s chief investment officer, says that Apple’s value in the stock market has made it the apple of every investor’s eye.
Apple may have won the race to the trillion-dollar mark but other tech titans are quickly catching up. Amazon recently disclosed its second quarter’s earnings report which showed that the ecommerce giant’s market cap had risen over $877 billion and could hit $1 trillion before the end of 2018.
Google’s parent company, Alphabet, is currently around $858 billion in value followed by Microsoft at $817 billion. Which one of these contenders will be the second to reach the trillion-dollar club? Only time will tell.
