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Why Apple Stock Climbed to a New All-Time High Today

By Joe Tenebruso – Jan 3, 2022 at 6:09PM

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The tech titan briefly achieved a stunning $3 trillion market cap -- and analysts see even more gains ahead for investors.

What happened

Shares of Apple (AAPL 0.83%) rose 2.5% on Monday to a record closing high of $182.01 after an analyst released positive commentary about the tech giant.

So what

Wedbush analyst Daniel Ives believes that investors should focus on the strong consumer demand for the iPhone rather than Apple's near-term supply chain challenges. He estimates that the company sold more than 40 million iPhones during the holiday shopping period despite a global semiconductor shortage. 

Better still, Ives said Apple is likely to have gained share in China's massive smartphone market, thanks in part to the surging demand for its 5G-enabled devices.

A happy investor is looking at a rising stock chart on his computer.

Image source: Getty Images.

Additionally, Ives values Apple's fast-growing services business at a whopping $1.5 trillion. The company's massive installed base of users is allowing it to sell a steadily rising number of subscriptions to popular services such as Apple Music and Apple Arcade. In turn, he expects the company to generate $100 billion in annual services revenue by fiscal 2024, up from roughly $68 billion in its fiscal 2021. 

For these reasons, Ives expects Apple's stock price will climb by another 10% to $200 in the coming year. 

Now what 

Apple's booming services segment is bolstering its already remarkable profitability. (The tech juggernaut's net income grew to a staggering $94.7 billion in its fiscal 2021, which ended Sept. 25.) These high-margin subscription sales are much appreciated by investors, in part due to their recurring nature.

Moreover, this combination of profit margin expansion and increasing revenue predictability has enticed many investors to pay higher price-to-earnings multiples for Apple's stock -- a pattern that contributed to its market value soaring to a nearly unfathomable $3 trillion. It's also likely to help drive the share price to additional new highs in the weeks and months ahead.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns and recommends Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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