Issue of the week: Is Apple’s stock a bubble?

Since overtaking Exxon-Mobil as the world’s biggest company in January, the tech giant has gone stratospheric.

Apple continues to defy gravity, said The Economist. Since overtaking Exxon­Mobil as the world’s biggest company in January, the tech giant has gone stratospheric: It’s now valued at an astonishing $570 billion, compared with Exxon’s $400 billion. That’s like adding a Procter & Gamble or a Wells Fargo in value—in just three months. Apple’s share price has topped $600, having risen 75 percent in the past year and more than 50 percent in 2012 alone. The company has single-handedly delivered more than 10 percent of the S&P 500’s gains this year, leading many investors to decide they “can’t afford not to have Apple in their portfolio.” But as the stock climbs ever higher, there are worries it’s headed into bubble territory. Can Apple’s incredible run possibly continue?

To “infinity and beyond,” if you ask most of Wall Street, said Paul R. La Monica in CNNMoney.com. If anything, Apple’s stock price still looks vaguely reasonable, given that its earnings—a record $46 billion in revenue in the last quarter of 2011 alone, before the latest iPad’s blistering debut—continue to shatter expectations. Far from some “hype-fueled stock,” Apple is soaring because it is “producing real tangible products that people want to buy.” It could “easily become” a $1.5 trillion company by 2015, said Eric Jackson in Forbes.com. The iPhone still has plenty of new markets to conquer, iPad sales growth is practically vertical, and a rumored iTV could completely remake the home-entertainment market. Imagine if the company boldly pushes into new areas, like mobile payments. This is no bubble—it’s only the beginning.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up
Explore More