Apple’s market capitalization exceeded $5 trillion for the first time at the close of trading, reaching $5.005 trillion. The company’s shares rose 0.5%, The Wall Street Journal reports.
Apple became the second corporation in the world, after chipmaker Nvidia, to close trading with a market capitalization of more than $5 trillion.
Six previous attempts
Apple’s market capitalization had previously exceeded $5 trillion six times during the trading day. However, by the market close, the company had fallen below that mark each time.
This time, the rise in its shares allowed Apple to end the day with a market capitalization of $5.005 trillion.
According to the WSJ, Apple shares are trading at a higher valuation relative to the company’s earnings than the average S&P 500 company, although its revenue growth rate is below the index average. The S&P 500 is a stock market index comprising 500 U.S. publicly traded companies with the largest market capitalizations.
Record after leadership change
Apple’s new record came in the first months following a change in the company’s leadership. Tim Cook stepped down as CEO after 15 years in the role, and John Ternus took over the company.
During Cook’s tenure, Apple’s market capitalization increased thirteenfold. The company’s annual services revenue grew from about $10 billion to more than $100 billion.
For John Ternus, maintaining the pace of growth will be a challenge amid a shortage of memory chips and competition from OpenAI and Google.
Device prices and investor expectations
Apple is facing rising costs for memory and storage components for the iPhone, Mac and iPad. In response, the company raised prices for its devices, including older iPhone models, which typically became cheaper after new models were released.
Following the first wave of price increases, Apple shares rose by approximately 25%.
Bank of America analyst Wamsi Mohan believes that buyers of Apple devices may be willing to pay more. In his view, the foldable iPhone Duo and an updated Siri could spur a new smartphone upgrade cycle.
