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Will Apple Stay on Top Forever?

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It's been an interesting year for Apple (NASDAQ: AAPL  ) -- by turns scary and exhilarating.

The iStuff maker surpassed ExxonMobil's (NYSE: XOM  ) market cap way back in January, and it's been the most valuable equity on the planet ever since. But the ride has been anything but smooth: Share prices peaked in September and have fallen more than 22% from those lofty all-time highs. The iPhone 5 and iPad Mini may be breaking sales records, but they have failed to wow analysts and investors.

Still, the stock has gained 32% year to date, leaving the Dow Jones Industrial Average (DJINDICES: ^DJI  ) far behind. It's hard to complain about market-stomping annual gains like these:

AAPL Chart

AAPL data by YCharts.

Cupertino still dwarfs Exxon's $404 billion market cap by about 20%. Will Apple be the biggest kid on the block in 2013, too, or is it time for a change at the top? What if Apple never sees $700 per share again?

If you think the idea of Apple falling back is ridiculous, you haven't been paying attention. Giants stumble all the time, and even Exxon has been bested by several giants over the last decade. Check out this historical rollercoaster:

AAPL Market Cap Chart

AAPL Market Cap data by YCharts.

Microsoft (NASDAQ: MSFT  ) obviously peaked a few years before the start of this chart, during the overheated dot-com boom. The software giant has seen and squandered many chances to climb back on the throne, notably with the utter failure you know as Windows Vista. General Electric (NYSE: GE  ) suffered grievous damage in the financial crisis of 2008, being half a bank itself.

Grandpa Exxon will always rise and fall with the oil market. When we hit the dreaded "peak oil" plateau, the giant must adapt and start selling alternative energy solutions. Failing that, Exxon will shrink to a fraction of its current bulk.

Apple faces a similar innovation dilemma. The company has made an unparalleled fortune by extending and refining the basic iPhone concept over the last five years, but the market for these gadgets may soon reach saturation. And that's where Apple needs to adjust its business model, come up with mind-blowing new products (not just a bigger or smoother iPhone), or perhaps both. These are no simple "gimme" adjustments.

There's no doubt that Apple is at the center of technology's largest revolution ever and that longtime shareholders have been handsomely rewarded with gains of more than 1,000%. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons both to buy and to sell Apple, as well as what opportunities remain for the company (and your portfolio) going forward. To get instant access to his latest thoughts on Apple, simply click here now.

Read/Post Comments (1) | Recommend This Article (4)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 06, 2012, at 2:30 PM, kthor wrote:

    no one stays on top forever ... apple products are getting boring ...history will repeat itself (look at microsoft and others) ...won't happen soon but it will eventually

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Related Tickers

10/26/2016 4:00 PM
AAPL $115.59 Down -2.66 -2.25%
Apple CAPS Rating: ****
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General Electric CAPS Rating: ****
MSFT $60.63 Down -0.36 -0.59%
Microsoft CAPS Rating: ****
XOM $87.09 Up +0.37 +0.43%
ExxonMobil CAPS Rating: ****