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CUPERTINO — Silicon Valley technology giant Apple on Thursday became the first public company in U.S. history to reach a $1 trillion market value, ahead of rapidly rising Seattle-based Amazon, cementing Apple’s long-held place as the world’s most valuable company.
The milestone is the culmination of Apple’s persistent growth and continued delivery of hugely popular products. From the early days of the Macintosh computer in the 1980s to the portable iPod, iPad, iPhone and Apple Watch with their app-based services, Apple’s products and vision have lifted the company to extraordinary heights.
Steve Jobs and Steve Wozniak founded Apple in the Los Altos garage of Jobs’ home in 1976. Today, experts point to the leadership of Apple’s late co-founder Jobs and current CEO Tim Cook as pivotal to the company’s enduring success.
“Symbolically, it’s an important milestone, which speaks to how transformational, successful and unparalleled the Apple ecosystem is that Jobs and Cook have created in succession,” said Dan Ives, GBH Insights’ head of technology research. “It just speaks to how revolutionary the iPhone’s been.”
Apple first reached its trillion-dollar market capitalization when its share price touched $207.05 shortly before 9 a.m. PDT Thursday. Apple’s shares later closed at $207.39, up about 2.9 percent — surpassing the $207.05 share price that put its market value squarely at the $1 trillion level.
Analysts calculated Apple’s market capitalization by multiplying the share price with the outstanding share count, which was 4,829,926,000 as of July 20, according to the company’s 10-Q filing to the Securities and Exchanges Commission on Wednesday.
Apple didn’t return requests for comment Thursday about its market cap milestone.
Alhough Apple’s achievement was a U.S. first, PetroChina in 2007 was the first listed company worldwide to reach $1 trillion. PetroChina now is trading at a market value of around $214 billion, Forbes reported.
Apple’s climb has been a slow, steady advance built on consecutive quarters of solid growth.
“Silicon Valley wouldn’t be what it is today without Apple,” Ives said.
Ives expects Amazon — currently still shy of a $900 billion market cap — could join Apple in the trillion-dollar club in 2019.
For Cupertino-based Apple, a 1 percent increase in the number of iPhones sold in its fiscal third quarter gave it a 20 percent jump in iPhone revenue compared with the same period a year ago, driven by sales of popular but pricey smartphone models such as the iPhone X.
Apple’s most rapid revenue growth has come through its services, however, such as Apple Music and Apple Pay, and wearables including the AirPods and Apple Watch.
“They extracted more revenue and more profit from the most incentivized customers in the market,” said KeyBanc Capital Markets analyst Andy Hargreaves. “As for the wearables, after early stumbles and not knowing quite what to do, Apple hit its stride. They added increments of growth surrounding the iPhone.”
However, geopolitical risks in the near term have the potential to derail some of Apple’s momentum. A looming trade war between the United States and China could possibly result in China slapping tariffs onto Apple products such as the Apple Watch.
In a conference call with analysts Tuesday, Cook said he hoped that “calm heads will prevail” in both Washington and Beijing.
The China-U.S. trade dispute could be particularly painful for Apple as mainland China remains a huge consumer base and the hub of most of its manufacturing, Hargreaves said.
But Creative Strategies’ consumer technology analyst Carolina Milanesi said the “impact of new tariffs on phones has been short-lived” in the past.
“My proof points are South Korea and their increase in tax of a few years ago, and Russia, where there was a crackdown on import duties between 2010 and 2012,” said Milanesi. “In both occasions, prices grew, and the market slowed down for a few quarters before picking back up.”
Analysts suggested Apple’s new U.S. market cap record will have almost no impact on the company’s day-to-day operations or its consumers. Furthermore, they said they don’t expect the milestone to galvanize investors to sell or buy more Apple shares.
“From a day-to-day perspective, I am sure it is business as usual (for Apple),” said Milanesi. “Does it matter for Apple? Sure, it proves that investors believe in the path they are on, especially given some of the bets they made with iPhone X pricing and the focus on services.”
But analysts noted that Apple reaching the trillion-dollar market capitalization does have some significance.
“I’d be a fool to say there is literally no importance to it,” said Hargreaves. “It is a notable moment. It just doesn’t mean much in a practical sense. Like, is turning 50 (years old) any different than turning 49?”
Staff reporter Rex Crum contributed to this article.
