Apple Bullish (APPL) expects iPhone maker to reach $ 3 trillion market capitalization by 2022

Several models of Apple Inc.’s iPad at the company’s Yeouido store during its opening in Seoul, South Korea, on Friday, February 26, 2021.

Jean Chung | Bloomberg | fake images

Apple could reach a market capitalization of $ 3 trillion in 2022, according to Wedbush analyst Dan Ives, who is bullish on the tech giant.

Shares of the iPhone maker are down 5% so far this year. Earlier this year, investors ditched the company’s shares after a historic December quarter.

Apple is the world’s most valuable company with a current market capitalization of about $ 2.1 trillion. It crossed the first trillion in 2018 and the $ 2 trillion mark in 2020. Analysts, including Ives, have previously discussed Apple’s roadmap to the record $ 3 trillion mark.

“We think ultimately within 12 to 18 months,” Ives told CNBC’s “Street Signs Asia” on Tuesday when asked about a possible timeline for the next milestone.

“If you look at innovation, if you look at the super cycle that unfolds in the service business right now, I think this is just kind of the next stage of growth,” Ives said, adding that he’s ready to go. show skeptics that Apple remains focused on innovation.

In late April, Ives raised Apple’s price target from $ 175 per share to $ 185, maintaining a higher rating than the stock. Apple shares closed at $ 125.90 a share during normal trading hours Monday.

Software services

Apple has been viewed as a hardware company for years, while CEO Tim Cook pushed the narrative that the company’s iOS operating system has an ecosystem of services, built around a base of more than 1 billion device users. , which is a big part of your future.

But the mix of hardware and software has evolved, and in 2020, the tech giant received its biggest backing from Wall Street and investors.

Ives values ​​Apple’s software services business at around $ 1 trillion right now and expects it to rise to around $ 1.5 trillion for the company’s market value to reach $ 3 trillion.

“They have put an iron fence around their installation base, they continue to monetize it, and the bears and skeptics will continue to doubt them,” he said.

He said Apple continues to “prove them wrong.” He added: “So when I look around the corner, despite this period of digestion, I see a market capitalization of $ 3 trillion (in) 2022.”

At its Worldwide Developers Conference, or WWDC, on Monday, the company showcased a host of new updates for major Apple products. It included iOS 15, the latest version of the iPhone operating system.

New iPhones are also expected later this year, while an Apple Car is also in the works.

Ives said that at this time, Apple is laying the foundation for the next stage of growth where software and services play an important role.

Risks to the $ 3 trillion target

There are several potential risks that could prevent Apple from reaching the historic market capitalization of $ 3 trillion, according to Ives.

They include a court battle with Epic Games, maker of the popular video game Fortnite, where Cook faced heavy questioning from the judge last month.

Last year, Apple removed Fortnite from its iPhone App Store, saying the game violated its guidelines for its software distribution platform. Epic Games responded by filing a lawsuit within hours, accusing Apple of anti-competitive behavior. Apple then filed counterclaims and responses, seeking damages for Epic Games’ breach of contract.

Ives also pointed to the growing regulatory scrutiny around the world. The European Commission said in April that the iPhone maker “abused its dominant position” in distributing music streaming apps through its app store..

CNBC’s Eric Rosenbaum contributed to this report.

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