As Apple approaches $3T, Wedbush thinks it could be worth as much as $4T
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Apple (NASDAQ:AAPL) shares rose on Wednesday, nearing the $3T market cap mark, but investment firm Wedbush Securities said the tech giant could be worth as much as $4T.
Analyst Dan Ives, who has an outperform rating and a per-share price target of $220 on Apple (AAPL), said the company is "playing chess while others play checkers," as it is on pace to generate nearly $100B in annual services revenue on double-digit growth this year. For comparison purposes, the company generated roughly $50B in services related revenue in fiscal 2020.
"Herein lies the key to the valuation re-rating that we believe will continue to take place around Apple's stock as the Street further appreciates the sheer massive potential of this services revenue that we now assign a valuation in the $1.4 trillion range," Ives wrote in an investor note. "We believe Apple's fair valuation could be in the $3.5 trillion range with a bull case $4 trillion valuation by [fiscal 2025]."
In addition, Ives noted that Wall Street has "severely underestimated" the upgrade opportunity around the iPhone, as a "mini super cycle" could be coming with the iPhone 15. Ives added that an estimated 25% of the iPhone customer base has not upgraded their iPhone in four years.
Apple (AAPL) is continuing to build its ecosystem and moat, especially with the newly announced Vision Pro headset, which Ives believes is another expansion of the company's App Store moat.
"We continue to strongly believe this is the first step in a broader strategy for Apple to build out a generative AI driven app ecosystem for its golden customer base that will have thousands of use cases across fitness, health, sports/movies via Apple and partner (e.g. Disney) content, and a myriad of other areas just starting to take shape with developers," Ives wrote.
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