Business

Apple Nears Historic $3 Trillion Market Valuation, Boosting Tech ETFs

Published by
Matthew Martins
  • Apple’s stock price surges 35% in 2023, nearing the historic $3 trillion market valuation.
  • Investors can tap into Apple’s success through ETFs with significant allocations to the tech giant.
  • The tech rally, supported by AI hype and positive market conditions, fuels Apple’s growth, while Warren Buffett’s confidence and a recent multibillion-dollar deal with Broadcom further strengthen the company’s prospects.

Apple Inc. (AAPL) has been on a soaring trajectory this year, inching closer to a historic milestone as its market valuation approaches $3 trillion. With a remarkable 35% surge in stock price since the beginning of the year, Apple has added nearly $690 billion in market value. If the stock climbs another 10%, it will become the first company ever to achieve a $3 trillion market valuation. This impressive performance has attracted the attention of investors seeking to capitalize on Apple’s success through ETFs with significant exposure to the tech giant.

The tech rally, driven by excitement around artificial intelligence (AI), improving corporate earnings, and the pursuit of safe investments, has played a significant role in Apple’s massive gains. According to data from BofA Global Investment Strategy, U.S. tech stocks are currently outperforming the S&P 500 by the greatest margin in 97 years.

Furthermore, the belief that the Federal Reserve is nearing the end of its interest rate hike cycle has bolstered Apple’s growth prospects. The tech sector relies on borrowing for its expansion, and low-interest rates make it cheaper to obtain funds for further initiatives.

Investors have been particularly attracted to Apple due to its consistent revenue streams and substantial cash flows. The tech giant reported strong second-quarter fiscal 2023 results, surpassing expectations for both earnings and revenues, primarily driven by robust iPhone sales. This reliability has not gone unnoticed by legendary investor Warren Buffett, who considers Apple a better business than any other in Berkshire Hathaway Inc.’s portfolio. Buffett’s stake in Apple, initially valued at $1 billion in May 2016, has grown to a staggering $151 billion as of March 2023, comprising approximately 45% of his portfolio.

Apple’s recent multibillion-dollar deal with Broadcom (AVGO) to manufacture 5G radio frequency components and wireless chips further bolsters its market position. With a Zacks Rank #3 (Hold) and a Growth Score of B, Apple is poised for future growth, reinforced by its ranking within the top 27% of Zacks Industry Stocks.

To tap into Apple’s success, investors can consider several ETFs with significant allocations to the tech giant. The Technology Select Sector SPDR Fund (XLK) is the most popular and heavily traded ETF, with approximately $44 billion in assets under management (AUM) and an average daily volume of 6 million shares. Vanguard Information Technology ETF (VGT) manages around $49 billion in its asset base, while the MSCI Information Technology Index ETF (FTEC) has approximately $6.4 billion in AUM. The iShares US Technology ETF (IYW) tracks the Russell 1000 Technology RIC 22.5/45 Capped Index and has AUM of $11.4 billion.

As Apple continues its march towards the historic $3 trillion market valuation, investors are eagerly eyeing the company’s potential for future growth. With its steady revenue, massive cash flows, and successful product offerings, Apple remains a force to be reckoned with in the tech industry.

Matthew Martins

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Published by
Matthew Martins

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