Apple (AAPL 0.64%) has been a pioneer in many ways. The tech leader broke ground in personal computing, challenging the dominance of IBM (IBM 0.16%) and its PC with its early Apple and Macintosh brands of hardware. Its rollout of the iPod in the 2000s helped popularize the form factor that would lead to the mobile device revolution, and the success of the iPhone line of smartphones speaks for itself.
Apple was also top dog in the stock market, becoming the first U.S.-listed stock to reach the $1 trillion market capitalization level. For an encore, Apple went on to top $3 trillion in market cap briefly in 2021, and it remains the most valuable stock in the market by far. Let's take a closer look at the journey that got Apple to where it is today and what could lie ahead for the company in the future.
The first trillion is the hardest
Apple's stock went public in 1980, and its performance is among the most impressive in stock market history. A $1,000 investment in Apple more than 40 years ago would have grown to $17.2 million today.
AAPL Total Return Price data by YCharts.
Yet as you can see from the chart above, it wasn't always a smooth ride. Early on, the fledgling tech stock had very turbulent price movements as it vied for position in a highly competitive market for personal computing. Apple largely coasted on its success in the early 1990s and faced an existential threat by the middle of the decade. It took the return of co-founder Steve Jobs in 1997 to return Apple to a path to accelerating sales growth and profitability.
From there, Apple started releasing the products that would make the company famous for a whole new generation of customers. The iMac in 1998 showed that computers could be stylish, eliminating the traditional boxy design in favor of a colorful form factor that inspired customers visually.
In 2001, the iPod marked Apple's entry into personal music devices. It was a huge hit, and the launch of the music store iTunes in 2003 represented Apple's initial foray into providing services to supplement its hardware sales. The first MacBook laptop came out in 2006 to great fanfare.
Image source: Getty Images.
And of course, no history of Apple would be complete without calling out the release of the first iPhone in 2007 as a key moment. Even 15 years later, the iPhone line remains by far Apple's biggest seller, with loyal customers often racing out to upgrade their models whenever a new version comes out. More products have followed, including the iPad tablet, the Apple Watch wearable device, and AirPod wireless earbuds.
With that as background, it's surprising in hindsight that Apple's stock value grew as slowly as it did. The company didn't reach $100 billion in market capitalization until 2007. And from there, even as its product line boomed, it took more than a decade before Apple hit the $1 trillion mark in August 2018.
The stock market finally recognizes Apple's strength
Apple has accomplished even more in the past three years from a financial standpoint. The already massive sales that Apple generates have grown, going from $266 billion in fiscal 2018 to more than $378 billion over the past 12 months. Net income has jumped even more substantially, going from $59.5 billion in fiscal 2018 to more than $100 billion in the past year.
Perhaps most impressive is that Apple's market cap tripled within three years even as the company made massive efforts to put its cash to work by reducing its share count. Immense stock repurchase programs have averaged nearly $80 billion per year since 2018. Over the past decade, Apple has seen its outstanding shares drop from more than 26 billion to just 16.5 billion -- making each share investors hold that much more valuable.
What's made the difference is Apple's ability to generate confidence in its staying power. In 2016, Apple's stock traded as low as 10 times its earnings over the preceding year, reflecting skepticism among investors that its largely hardware-driven business would be able to sustain its financial performance over the long run. Yet time after time, Apple has successfully refreshed its well-established product lines while supplementing its lineup with new ideas that have resonated with consumers. Now, investors are willing to pay closer to 30 times earnings for the shares, and that's been a key driver of stock gains.
What's comes after $3 trillion?
Apple has high hopes to keep innovating, both through its already popular existing products and with new ideas. Consumers can expect new iPhones well into the future, but they might also end up with products ranging from augmented reality and smart-home tech to the long-rumored Apple Car.
Whatever Apple does, its fans will be watching closely. Smart investors will be keeping an eye on Apple as well to see how much higher its stock can soar.
