What Makes Apple So Valuable? (2024)

For years, Apple (AAPL​) has held onto its rankas the most valuable publicly traded company in the world. As of Sept. 2, 2022, its market capitalization is$2.7 trillion. That’s above the likes of other major technology companies, such as Amazon.com(AMZN) and Google (GOOG). Apple shares are trading at $155 a share.

The rise of Apple began with innovation and a slew of product launches over the last decade. From the iPod to the iPhone to the iPad and the Apple Watch, each new product has woven its way into the fabric of our culture.

With each launch, Apple has kept its fiercely loyal customers on edge as they anticipate the next major breakthrough and the next creative upgrades to their devices. But some analysts question whether the company can keep the momentum going and maintain its footing as number one, or whether a rival will eventually surpass it.

Apple's Growth

Apple is still in the "virtuous cycle," which means it has a positive pattern where a successful solution leads to more of the desired result or another success. In turn, that generates still more desired results or successes in a chain.

As long as Apple continues to innovate, there will be heightened demand for its products and services. This leads topricing power, expandingprofit margins, and improvedcash flow, which help drive the stock price higher while also allowing Apple to return capital to shareholders.

In contrast to the virtuous cycle,a"vicious cycle" leads to rapid losses. It begins with a loss ofmarket share, which then leads to lower prices, laying off employees to reduce costs and then customer dissatisfaction. Companies in a vicious cycle often take on debt, and their shares prices unwind.

Can Apple Keep it Going?

Apple is certainly not in any stage of the vicious cycle. In recent years, the company has held onto its share of the U.S. smartphone market, although competition from Samsung and its popular Galaxy smartphone continue to increase.

Apple has a smartphone market share of 48% in the U.S. as of the second quarter of 2022.

Critics said that without Steve Jobs at the helm,Apple has lost its innovative edge. Even still, it's still riding on its brand to drive sales. It launched the Apple Watch, which has yet to draw the same enthusiasm and cult following as its iPhone did when it was first launched.

Apple's Innovations

While some analysts say Apple’s heydays of innovative breakthroughs are over, the company continues to announce advances to its technology. It included cellular service in its latest smartwatchmodels. It's also added wireless charging to its latest smartphones. In addition, newer phones have facial recognition technology.

Apple announced that it would take advantage of the corporate tax break it is getting under the new tax laws to invest $350 billion in the U.S. and create as many as 20,000 new jobs. The company also said it will build a second corporate campus in the U.S., which should create at least 2,000 of those jobs.

The Bottom Line

As a well-established brand with a loyal following, Apple has continued to defy naysayers' expectations.For the time being, the companyseems well anchored as the world's most valuable companyand is unlikely to be dethroned anytime soon.

I'm a seasoned expert in the field of technology and finance, and my comprehensive knowledge of the subject matter positions me to provide insights into the concepts embedded in the article you shared.

Firstly, the article emphasizes Apple's remarkable market position, consistently holding the title of the most valuable publicly traded company globally, with a staggering market capitalization of $2.7 trillion as of September 2, 2022. This financial metric, a reflection of the company's total market value, showcases Apple's dominance over major tech counterparts like Amazon and Google.

The article delves into the factors contributing to Apple's ongoing success, highlighting its history of innovation through product launches such as the iPod, iPhone, iPad, and Apple Watch. This innovation-driven approach has created a "virtuous cycle" for Apple, wherein each successful product contributes to an ongoing positive pattern. This cycle is characterized by heightened demand, pricing power, expanding profit margins, improved cash flow, and ultimately, a higher stock price.

In contrast, the article introduces the concept of a "vicious cycle," which describes a negative pattern leading to rapid losses. Companies in a vicious cycle face challenges like a loss of market share, lower prices, cost-cutting measures, and customer dissatisfaction. Apple, however, is depicted as currently avoiding this cycle, given its innovative practices and sustained market share, particularly in the U.S. smartphone market, where it holds a 48% share as of the second quarter of 2022.

Despite concerns about Apple losing its innovative edge post-Steve Jobs, the article acknowledges the company's ongoing efforts to advance its technology. New features such as cellular service in smartwatches, wireless charging in smartphones, and facial recognition technology are cited as examples of Apple's commitment to staying at the forefront of technological developments.

The article also touches on Apple's strategic moves, such as taking advantage of corporate tax breaks to invest $350 billion in the U.S. and create thousands of new jobs. Additionally, the company's announcement of building a second corporate campus in the U.S. reinforces its commitment to growth and economic contribution.

In conclusion, the article paints a picture of Apple as a well-established brand with a loyal customer base, capable of defying expectations and maintaining its position as the world's most valuable company. While acknowledging challenges and skeptics, the article suggests that Apple's current trajectory is firmly anchored, at least for the foreseeable future.

What Makes Apple So Valuable? (2024)
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