The bigger, the better. If that old adage is true, Apple (AAPL +3.26%) should be the best stock on the planet. It's definitely the biggest, with a staggering market cap of over $2.7 trillion.
But doesn't the bigger a company becomes also make it harder to keep growing? In some ways, it does. However, I think that Apple will nonetheless continue to increase in size for years to come. Here's my prediction for how much the tech giant will be worth in 2030.
NASDAQ: AAPL
Key Data Points
Apple's growth drivers
Let's first look at exactly how Apple can grow over the next seven years. There are several ways, with some of them more important than others.
The obvious path for Apple to grow is to increase its iPhone sales. Nearly 1.5 billion people use iPhones worldwide. There's plenty of room for growth, though: Apple's global market share in the smartphone market is under 28%.
One key way to attract new users is innovation. Some changes that could boost iPhone sales don't even require Apple to be all that innovative. For example, it could follow on the heels of competitors such as Google, Samsung and Motorola by introducing a foldable display. However, Apple could also gain market share by offering even faster processors and longer battery life.
The company's biggest growth driver in recent years has been its services business. I expect this trend to continue throughout the rest of the decade and beyond. In particular, Apple should be able to increase its advertising sales. A long-rumored hardware subscription service could also serve as a major growth catalyst.
What about totally new products? Apple plans to launch its Vision Pro mixed-reality headset in early 2024. CEO Tim Cook called the introduction of the device "the beginning of a new era for computing."
Some believe that Apple's "next star product" could be a self-driving electric car. This could be something of a long shot. However, if Apple can really wow customers it's not out of the question that the company could make a splash in the market.
My prediction
Apple stock has delivered a return of more than 6x over the last seven years. It more than quadrupled during the seven-year period prior to that. I don't anticipate that kind of growth by 2030.
I do expect that iPhone's market share will increase over the next few years. I also look for Apple to introduce a hardware subscription service that helps make that happen (along with boosting its revenue).
The more iPhones in use, the more Apple will make on other services too. App Store, Apple Music, Apple Pay, and iCloud revenue should grow.
I'm less confident about the impact of Apple's new products. My hunch is that the high cost of the first version of Vision Pro could limit its financial impact. But if Apple can get the price tag down with later versions (or attract lots of customers through a subscription service), mixed-reality headsets could provide a nice bump to the company's overall growth. As for the rumored Apple Car, I'd prefer to wait and see what happens.
Overall, I think that Apple will be able to grow its earnings by somewhere between 7% and 10% on average per year. Its market cap should more or less mirror that growth. Based on this, I predict that Apple will be worth between $4.3 trillion and $5.3 trillion by 2030. The midpoint of this range is $4.8 trillion, which seems to me to be a fairly good estimate.
What could get in the way
One potential fly in the ointment with my prediction is that Apple's valuation is already somewhat high with shares trading at a forward earnings multiple of 26.4x. With significant growth already baked into the share price, Apple could deliver a weaker performance than what I expect in the coming years.
While I think Apple will continue to win in the marketplace, it's also possible that competitors could out-innovate the company. A wild card that dents iPhone's market share would definitely derail my prediction.
An extended economic downturn would throw a major wrench into my forecast as well. Apple's share price tends to fall even harder than the overall market does during major sell-offs.
Still, I believe that Apple could easily hit my target market cap of $4.8 trillion by 2030. Whether or not it will -- and if it will be enough for the company to remain the biggest in the world -- remains to be seen.
