Multi-trillion Dollar Companies

Back in May 2018, was when Apple become the first trillion-dollar publicly traded company and then August 2020 it became the first $2 trillion company and now Apple is worth over $2.5 trillion. [$2.55 trillion].

Microsoft is at $2.26 trillion.

Google is at $1.93 trillion.

Amazon is $1.76 trillion.

Facebook is at $1.08 trillion.

There are four companies over half a trillion. Tesla, Taiwan Semiconductor, Berkshire Hathaway and Nvidia.

US GDP in 2018 was $20.6 trillion and now it is $22.7 trillion. The US GDP increased 10% and the value of the tech giants increase by about 200%. The CBO (Congressional Budget Office) projects US GDP will be $32 trillion in 2030.

According to the latest long-term forecast, Apple price will hit $200 by the middle of 2022 and then $250 by the middle of 2023. Apple will rise to $300 within the year of 2024, $400 in 2026, $500 in 2027, $600 in 2030 and $700 in 2033.

Apple is projected to double its valuation by 2024 and double again by 2030. Apple could be a $10 trillion company in 2030. The Big four tech companies are currently valued at over $8 trillion. Doubling by 2024 and again by 2030 and the Big Four tech companies will be worth $32 trillion.

Apple is worth about fifteen times the peak valuation of Nokia. This was because Apple transformed the cellular phone business from a product business to a service business. Apple created a software platform that could dominate music, games, finance and other industries.

The technology companies overtake an older competitor in one industry but transform the business into ultra-high margin and one where they can dominate other industries. Margins going from 4% to 40% increase the value of the company by ten times. This is transforming the whole economy.

GDP is the sum of spending (or income) in a single year. Corporate valuation can be deemed to be the net present value of multiple years of earnings. Corporate value would be less than GDP if the net income is about 5% of revenue or less. 20 years of forward earnings would be less than 100% of the single year. However, higher net income could enable many years of forward earnings to exceed the spending in a single year.

Apple doubling by 2024 would require things to go right:

* An outstanding 5G super cycle that supports iPhone sales increase comparable to early 2010s levels, when the product category was still in the middle of its growth life cycle;
* A sizable, game-changing product launch that adds revenues where none currently exist. The most likely candidates would be augmented or virtual reality wearable devices, or the Apple Car.
* Aggressive monetization of Apple’s user base, primarily through service offerings and cross-selling of wearable and complementary products. In the case of services, segment revenues would somehow need to double in three years or less, rather than the expected five.
* Acceleration in the share repurchase efforts. Apple has been retiring its stock at a pace of 5% to 6% per year. Doubling this rate would be enough to boost EPS to where it needs to be.