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Here’s 3 Reasons Why We Are Seeing Apple’s $2 Trillion Stock Rally

The Apple stock price surpassed $409 in after-hours trading after record revenues in the tablet and services markets. The firm’s strong presence in China and newfound demand for the Mac strengthens the company’s position for further growth. The company has successfully diversified out of the slowing smartphone market, targeting services and wearables. Apple  (NASDAQ:AAPL) saw…

  • The Apple stock price surpassed $409 in after-hours trading after record revenues in the tablet and solutions markets.
  • The company’s strong presence in China and newfound requirement for the Mac strengthens the organization’s position for more growth.
  • The company has successfully diversified from the slowing smartphone market, targeting services and wearables.

Apple  (NASDAQ:AAPL) saw record-high iPad and services revenues in China, documenting a revenue of $9. 33 billion in Q3. Strategists expected the technology giant to hit on a market capitalization of $2 trillion before the earnings report. The new earnings fortify the prediction.

The Apple stock surged by 6. 44% in after-hours trading, bringing it 409. 55. The market cap of the company now hovers at about $1.8 trillion.

The Apple stock exceeds $409 in after-hours trading. ) | Source: Yahoo Finance

The growing iPad and services revenues of Apple are critical for the firm’s long-term expansion for several reasons.

It offsets the plateauing increase of the smartphone industry. Second, it shows Apple’s strong presence in an integral market in China. Last, it positions the firm for further growth outside of its core enterprise.

#1: Offsetting Slowing Smartphone Industry Development

Since early 2019, various data points have pointed towards a slowdown in the smartphone market.

Smartphones are becoming more resilient concerning hardware and software. Users have fewer compelling reasons to switch their phones than before.

Gartner analyst Roberta Cozza also said that mobiles are too expensive. A top-end Apple or even Samsung flagship model could cost upwards of $1,000. The mid-tier smartphone marketplace has versions at half the price of 1,000.

She said:

Phones price over $1,000 now. That is a good deal of cash for what the user perceives as not enough. Consumers don’t see why they ought to update .

The increasing pill and service revenues could position Apple to protect the company from the danger of declining smartphone demand.

#2: Apple Performing Well in China

There is just one common theme among companies that have seen explosive performances in 2020: targeting the Chinese market.

Tesla’s Shanghai Gigafactory and its own earnings in the Chinese market led the carmaker to surpass analyst expectations.

Similarly, the U.S. stock market is apparently reacting favorably to Apple’s better-than-expected functionality in China.

Tim Cook, the CEO of Apple, emphasized throughout the earnings call that the Mac has witnessed newfound need in China.

We also continue to see exceptionally high new customer rates on Mac and iPad there. To give you about three out of four customers which are buying the Mac are new in China, a view, and about two out of three which are buying the iPad are new. And so all these are amounts that we’re super proud of.

#3: A Diversified Business

Though the smartphone business stays the core venture of Apple, it’s rapidly growing across several industries.

In the latter half 2019, Apple saw a noticeable expansion in the wearables industry.

The market share of the wearables industry. | Source: IDC

The popularity of the AirPod series pushed the dominance of Apple over the wearables sector to 35%.

In 2020, the company has managed to see record growth in the services market. Cook said:

Apple’s record June quarter has been driven by double-digit growth in both Products and Services and expansion in each of our geographic segments.

The company’s decreasing smartphone dependence and its presence in key industries could be a catalyst to raise investor confidence.

Disclaimer: This article represents the author’s opinion and shouldn’t be considered trading or investment information from The author holds no investment position in the above-mentioned securities.