Only 10 years ago, Apple's (AAPL -0.69%) market cap stood below $400 billion. That was enough to make the technology leader one of the biggest companies on the planet.
Apple now claims the No. 1 spot and has done so without interruption since late 2021. But the company's valuation is no longer measured in billions of dollars. Apple has a shot to make history today if its market cap is over $3 trillion at the market close. Should investors be excited or worried?
An investing milestone
No company in history has ever had a market cap of $3 trillion or higher at the end of a trading day. Apple briefly topped $3 trillion in January 2022 during intraday trading. However, its market cap fell below the level by the market close.
Apple's market cap was knocking at the door of the $3 trillion mark yesterday. Only a small gain was needed to break the barrier. The tech stock opened nearly 1.1% higher this morning, enough to do the trick.
This will without question be an investing milestone if Apple doesn't give up its gains by the end of the day. Only one other publicly traded company is even in the ballpark of reaching a $3 trillion valuation: Microsoft's market cap stands above $2.5 trillion.
Excitement or worry?
Investors certainly have reason to be excited about Apple's achievement. If today's gain holds up, the stock will have skyrocketed more than 48% in the first half of 2023.
However, some could be worried that Apple's market cap is now too high. The stock currently trades at a forward price-to-earnings ratio of nearly 29x.
Apple's recent financial performance doesn't appear to justify such a steep valuation. The company's revenue fell 3% year over year in its latest quarter. Earnings were flat compared to the prior-year period.
The jury is still out on what impact Apple's new Vision Pro mixed-reality headset will make. It's Apple's first new product in years. The reactions to the capabilities of Vision Pro were generally positive. However, the price tag of nearly $3,500 could greatly limit its commercial success.
What really matters
Although a $3 trillion market cap for Apple is a milestone worth celebrating, there's really nothing magical about the threshold. Investors will briefly cheer that the barrier has been broken -- and then they'll look for more.
What really matters for Apple is how much more it can deliver. The stock's valuation is at a historically high level. But there's some reason to believe that Apple's growth could accelerate going forward.
Wedbush Securities analyst Dan Ives wrote to investors on Friday that Apple is "heading into a massive renaissance of growth over the next 12 to 18 months." He stated:
In our opinion the Street has severely underestimated the massive installed base upgrade opportunity around iPhone 14 and now a mini super cycle iPhone 15 ahead with roughly 25% of Apple's golden customer base not upgrading their iPhones in over 4 years.
Ives isn't alone in his positive view of Apple. Of the 38 analysts surveyed by Refinitiv in June, 11 rated the stock as a "strong buy" with another 21 recommending the stock as a "buy."
We'll soon know if Apple makes history today with a closing market cap above $3 trillion. But come Monday, that milestone will be just that -- history. For investors, Apple's future is much more important than its present or its past.
