It’s been a great month for Apple, to say the least.
Apple (NASDAQ: AAPL) is basking in the afterglow of legendary investor Warren Buffett’s ringing endorsement.
The iPhone-maker’s stock hit an all-time high on Monday as the company moved ever-closer to a historic milestone: the $1 trillion market value mark.
The stock skyrocketed when Buffett revealed on the eve of the Berkshire Hathaway annual shareholder meeting that Berkshire had acquired 75 million more shares of Apple.
Berkshire now owns more than 240 million shares of Apple, an approximate 5% stake.
Buffett simply loves Apple. And it sounds like he has no intention of putting the brakes on buying Apple shares anytime soon.
He even went so far as to say that he’d like to own all of Apple if he could.
After Buffett’s endorsement, shares rose by about 2% on Monday alone. And as it stands, Apple is worth about $940 billion.
To push that level to $1 trillion, each share outstanding — there are about 4.9 billion of them — needs to trade at $203.48. That’s approximately 8% higher than where they are now.
So basically, Apple’s road to $1 trillion in market value is only $16 away. That’s how much each share would need to rise for the tech company to meet the legendary milestone.
The company wowed Wall Street with better-than-expected profits on May 1st. This was even as it reported that iPhone sales have slowed considerably in the U.S. But making up for the lull, sales in China and Japan have grown dramatically.
Apple also showered investors with plans for a huge stock buyback program. And that should boost earnings per share (EPS) and provide a dividend increase, too.
Buffett gushed about the buybacks at the Berkshire meeting. He told investors that share repurchases were a sensible use of Apple’s ginormous pile of cash.
Investors had feared that Apple’s best days were long behind it. Then suddenly, they realized it could be the best of two worlds: a value stock and a growth stock, thanks in large to Buffett’s passionate patronage.
The Apple rally has been really good for the rest of the tech sector, as well.
Apple could be the first company to reach the vaunted $1 trillion market cap. But three others aren’t too far behind it: Microsoft, Alphabet (Google), and Amazon.
Even Facebook, which took a huge hit from the Cambridge Analytica data scandal, is worth $515 billion. That’s less than 10% below its all-time high from earlier this year.
The broad rally in tech is even more impressive when you consider that Alphabet, which owns Google and YouTube, has been plagued by similar scandals to Facebook’s about Russia-bought ads on its platforms.
And Amazon has been the target of ire and derision from President Donald Trump.
But the five largest tech stocks are now worth more than $3.7 trillion collectively. To put that into perspective, they were all worth a little less than $3.3 trillion at the end of October 2017.
Even if its rally to $1 trillion takes longer than a few days, Apple could very well be the first U.S. company to mark the event.
So much for bad press hurting the sector…
It looks like investors’ love affair with Apple and the rest of big tech is still going strong.
That’s all for now.
Until next time,
John Peterson
Pro Trader Today