Apple and Amazon lead the pack to $1 trillion market value

Apple is the highest-valued private company on the global markets
Apple is the highest-valued private company on the global markets

For a long time, Apple appeared to be flying solo to a $1 trillion market value, but Amazon is right at its heels—and experts have no fears of a tech bubble.

Apple, at $939 billion, remains the highest-valued private company on the global markets—and could well cross the $1 trillion finish line after it releases its Tuesday.

But Amazon is right behind: on Friday, its cap reached $917 billion, before finishing at $882 billion, thanks to quarterly figures well received by investors.

Google's parent company Alphabet ($886 billion) and Microsoft ($827 billion) are also on track, while Facebook ($505 billion) is out of the race, having shed $119 billion in value after results released Thursday.

The biggest traditional economic players—billionaire Warren Buffet's holding company Berkshire-Hathaway ($492 billion) and bank JPMorgan Chase ($395 billion)—have been relegated to mere spectators.

State oil PetroChina briefly broke the $1 trillion barrier in 2007 during its , but has since dropped back down.

Safe haven

According to TDAmeritrade's mid-year review, online commerce giant Amazon's stock was the most popular buy in the first half of 2018, with Apple the second most popular sell.

"The retail trader who is buying that stock is also the same person who is probably an Amazon client," said JJ Kinahan, a chief market strategist for TDAmeritrade.

"They see a stock that has plenty of upside and benefitting from the money people have to spend with the economy and the job market improving," he added.

But Apple, which unveils record high after record high when it comes to quarterly results, holds its lead.

Ken Berman, Gorilla Trades strategist, is convinced that Apple will reach the $1 trillion mark after its Tuesday results, thanks to its range of iPhones, growing interest in the iPad and strength in its services.

Amazon is right on Apple's heels
Amazon is right on Apple's heels

"I don't think Apple stock is that expensive," said Nate Thooft of Manulife Asset Management.

"The tech sector is the safe haven of the equity market right now."

Analysts insist the situation is a far cry from that in the late 1990s, when several start-ups exploded on Wall Street—only for the "" bubble to burst.

New business model

"The big problem with the internet bubble was that the majority of businesses did not have revenues, did not have profits, many just responded to a fashion phenomenon," said Gregori Volokhine of Meeschaert Financial Services.

"That's not the case with all these companies that today have an essential place in people's lives," Volokhine said.

"Most of the leading tech companies in the late 1990s were trading at 100 times earnings," added Edward Jones investment strategist Kate Warne. "Very different than today."

Apple's price/earnings ratio stands at 18.62, underperforming the S&P 500 (20.86), the index representing the 500 biggest businesses on Wall Street.

But even in case of economic crisis, the technology sector is in a good place, according to Maris Ogg, founding principal of Tower Bridge Advisors.

"If you start to see the economy slowing, if companies have to cut cost, to fire people, they will invest in technologies towards more automation," she said.

For Nicholas Colas of DataTrek Research, it is also hard for investors to evaluate the business strategies with a fairly new business model.

"Equity valuations for FANG (Facebook, Amazon, Netflix and Google) stocks and other internet-enabled business models is a fundamentally new challenge for investors," he said.

"At their core, they are ideas created by a handful of people, developed/maintained by perhaps 10,000 coders (and sometimes much less), but then used by billions around the world. This is a new phenomenon, and we suspect equity markets do not yet understand what 'correct/normalized' valuations should be."

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© 2018 AFP

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User comments

Jul 29, 2018
Machines are going strong, but not Biology. Neurology, if not metabolism knowledge should improve ASAP. Birds incubate eggs, bring fish etc., to feed chicks. Similarly, Dogs let multiple pups suckle. So, Introduce Temporary or Permanent Allergy in those parents and see what happens to their affection (I mean in their Brains) !

Jul 29, 2018
No mention if they pay any taxes? I know these companies try as hard as possible to make it sure they don't, or as little as possible.

Jul 29, 2018
No mention if they pay any taxes? I know these companies try as hard as possible to make it sure they don't, or as little as possible.

It's their job to do so. How much in taxes do you donate to the government?

Jul 30, 2018
Sir Noumenon, perhaps you are to high up the mountain and breath the air with little oxygen and it is hard for you to apprehend? There's nothing so phenomenal about it.
Donate! What a joke if you think taxing is a donation. Why don't you tell us how you avoid the donations, teach us how it works, as I've not heard of that method before, donating taxes.
Which would you like to know: City, County, State and Fed? OK, here's one them, the State gets more than $1800. I do pay them though. I get to eat, go to the doctor when needed, go to college ,buy a home and raise my children. All of which I have achieved, and DO live fine.
If you believe Apple (as an example) can't pay taxes to get the things they need from governments then you have some warped sense of responsibility - and that isn't phenomenal. When you've lived in the sensible real world of that which is perceived you might learn more about visible world of reality rather than nothingness.
So please, tell us how do you donate?

Jul 30, 2018
Your complaint is that Apple doesn't pay enough taxes or tries to get out of doing so, as if paying corporate taxes was a matter of voluntary choice. It's not, as long as they're not breaking the law. You seem to imply that Apple shouldn't try to pay as little taxes as required of them, despite this being their obligation expected by investors.

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