Apple Becomes First Company To Top $3 Trillion Market Cap; Analyst Says Rally Has Further Legs

Apple, Inc. AAPL shares have had a rip-roaring start to the year and in the process scaled a major milestone.

What Happened: Apple has become the first company to breach a $3-trillion market capitalization mark by virtue of a 2%-plus rally on Monday.

After closing 2021 with a noteworthy gain of about 35%, Apple shares opened the first trading session of the year modestly higher. Buoyed by the broader market strength and positive expectations concerning Cupertino's fundamentals in 2022, the stock launched into a rally and hit an intra-day high of $182.88. Since then, the stock has given up some of its gains.

At the day's peak, Apple's market-cap swelled to $3.001 trillion, given the tech giant has 16.41 billion outstanding shares.

Apple first hit $1-trillion market cap in August 2018 and in two years' time, its market cap doubled to $2 trillion, having achieved the feat in August 2020.

"Being the first company to join the $3 trillion club is a 'flex the muscles moment' for Cook & Co. as the valuation re-rating continues into 2022 despite Fed jitters," Wedbush analyst and Apple bull Daniel Ives said in a note.

Related Link: Why Apple's 'AR/VR Opportunity' Gets This Analyst Excited About Cupertino's Growth Prospects

What's Driving The Apple Rally: The COVID-19 pandemic turned out to be positive for tech stocks, as demand for products and services skyrocketed amid the work-from-home and study-from-home environment necessitated by the pandemic.

The company's flagship product — the iPhone — continued to see strong demand. In the fiscal year that ended Sept. 25, 2021, the product fetched the company $191.97 billion in revenues.

The current 5G-driven iPhone cycle has gained further strength despite supply constraints serving as a dampener.

Apple isn't a one-trick pony and has a whole ecosystem built around its hardware. The company has seen great success in effectively monetizing its installed user base.

The valuation re-rating for Apple has been driven by the Services business, which is estimated to be worth $1.5 trillion on a standalone basis, Ives said. Annual revenue from the segment is expected to breach the $100-billion mark by 2024, he added.

"On a SOTP basis, we believe Apple is worth $3.5 trillion+ during 2022 as the iPhone 13 product cycle continues to play out," the analyst said.

Wedbush's Ives has an Outperform rating and $200 price target for Apple shares, with the bull-case price target at $225.

AAPL Price Action: Apple shares were 2.27% higher at $181.60 ahead of the close Monday. 

Related Link: 7 Tech Predictions For 2022: Apple-Facebook Face-Off In Metaverse, Tesla Reigns Supreme, Quantum Takes A Big Leap, And More

A staffer at an Apple store. Courtesy photo.