Apple is worth almost 3 trillion dollars. So should I buy Apple shares?

As US tech giant Apple nears a valuation of $3 trillion, our writer assesses whether now is the right time to add it to his portfolio.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

The technology company Apple (NASDAQ: AAPL) has been both a successful company and a lucrative investment for many investors. Indeed, since Warren Buffett decided to buy Apple shares five years ago, it has ended up being his largest position.  It has earned Buffett a paper profit for him in excess of $100bn.

This week the company’s market capitalisation has been close to reaching $3 trillion. Is now the time for me to buy Apple shares for my portfolio, or am I too late?

Apple’s onward march

For years now, bears have suggested that the Apple story is in danger of running out of steam. Where are the new products? Where is the visionary leadership? What about the threat posed by cheaper competitors?

I think some of those concerns have merit. I do see a risk that the rise of less costly smartphones could hurt Apple revenues and profits over time, for example. But so far, I think the company has proven to be highly resilient. Last year it recorded revenues of $365bn. That means that on average the company is making around $40m of sales every hour of the year. Profits were also enormous, at $109bn.

So I don’t find the bear case very persuasive. In fact, some of what is seen as weakness for Apple actually reflects its strength in my opinion. Take the perceived lack of innovation. Apple is basically focusing on a tightly controlled, small portfolio of products. That helps reduce complexity from the supply chain. It also means the company doesn’t dilute profit margins by getting into hundreds of less lucrative product areas.

That doesn’t mean there aren’t risks. An economic downturn could hurt demand for Apple’s premium products, damaging revenues and profits. Its juicy services margins could also be cut by the threat of regulatory action, something we’ve already seen when it comes to the company’s app store.

I’d buy Apple shares at today’s valuation

With the Apple share price touching new highs recently, is this bullishness fully factored into its valuation?

I don’t think it is. In fact I see further upside potential for the Apple share price over the long term, although in a volatile tech market there could be ups and downs along the way. That doesn’t bother me, though, as I reckon Apple has the potential to be a cash machine for decades to come. It’s reinvented itself for changing circumstances before – Apple has been listed on the stock market for over 40 years already.

Apple has a huge customer base. Many of them are deeply integrated into its product and service ecosystem. That makes them less likely to switch to other brands because of the time and effort it would require. The company has massive economies of scale. Its iconic brand continues to give it pricing power, which I expect to endure.

Its price-to-earnings ratio of 32 is not cheap. But I don’t think it’s expensive given my confidence that Apple can keep increasing its earnings in coming years. I’d be happy adding the company to my portfolio at that price. I don’t know if Apple will ever reach a $4tn valuation, but if it does I don’t want to be kicking myself for having missed an opportunity.


Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Christopher Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Tesla car at super charger station
US Stock

£1k invested in Tesla stock at the start of the year is currently worth…

Jon Smith reveals the performance of Tesla stock in 2025 and explains why he doesn't believe the move lower is…

Read more »

Woman riding her old fashioned bicycle along the Beach Esplanade at Aberdeen, Scotland.
Investing Articles

What sort of return could someone get by investing £20,000 in UK dividend shares?

Should UK savers consider dividend shares over cash? Stephen Wright thinks those looking for long-term passive income would be wise…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Around a 15-year high, is Barclays’ share price still too cheap to ignore?

Barclays’ share price is at a level not seen since 2010, but price and value aren't the same thing, so…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

47% below fair value and with an 18% earnings growth forecast, should investors consider this FTSE retail institution now?

This FTSE 100 British retail institution lost its way for a while but has bounced back in recent years, and…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Lloyds share price: up 40% this year, is it time to take profits?

The booming Lloyds share price is up nearly 40% in 2025, outperforming its UK banking peers. Our writer asks whether…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

If the stock market crashes tomorrow, here’s what I’ll do with my portfolio

A stock market crash can feel terrifying. Here’s why staying calm matters – and how this recovering FTSE 100 company…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Prediction: in 12 months the smashed up Diageo share price could transform £10,000 into…

Harvey Jones has taken a big hit on his Diageo shares but forecasts suggest next year may offer something to…

Read more »

Aviva logo on glass meeting room door
Investing Articles

Will the Aviva share price reach £10? Here’s what needs to happen

With profits potentially set to double by the end of 2026, could the Aviva share price do the same and…

Read more »