Apple & Amazon Battle to Reach US$ 1 Trillion Market


In May, Apple reached a market value of US$ 931 billion, putting the company closer to the US$ 1 trillion market before Amazon

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Image courtesy: Wikimedia Commons

Prior to the quarterly results of Amazon scheduled to be released on Tuesday (July 31) of the current financial year, the company’s market value went as high as US$ 917 billion, finishing at US$ 882 billion on Friday (July 27). This puts the company at a race against Apple to reach the coveted US$ 1 trillion market value.

Amazon market stock was the most popular even more than Apple

TDAmeritrade’s mid-year review said that Amazon’s stock was the most popular buy in the first half of 2018 – putting Apple in the second position. “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. He added, “They see a stock that has plenty of upsides and benefitting from the money people have to spend with the economy and the job market is improving.”

However, on an overall global basis, Apple has recorded better quarterly results and Ken Berman, a strategist at Gorilla Trades, believes that due to Apple’s iPhone sales, the company will easily reach the US$ 1 trillion mark after its quarterly results are also announced on Tuesday. Berman thinks Apple’s range of iPad and services will be key factors in giving the company the lead against Amazon.

Analysts have compared this situation with that of the 1990s when various start-ups were exploding on Wall Street to get the “” for their companies.

Google’s Alphabet and Microsoft pose great challenges too

Alphabet, Google’s parent company and Microsoft are also in the race with a current market value of US$ 886 billion and US$ 827 billion, respectively. Facebook was though in the race, with the recent loss of US$ 119 billion, and a current market value of US$ 505 billion, it has fallen out of it.

PetroChina, a state oil company, had briefly capped and broken the US$ 1 trillion cap in 2007 during its initial public offering (IPO), however, since then it has dropped back down.

What analysts say about these companies being different?

Gregori Volokhine of Meeschaert Financial Services said that the big problem with a “majority of businesses was that they did not have revenues, did not have profits,” and most of them simply acted upon a fashion phenomenon. However, Apple, Amazon and other companies mentioned above have acquired an essential place in people’s lives.

Edward Jones, an investment strategist at Kate Warne stresses on the new business model that is being followed nowadays. “Most of the leading tech companies in the late 1990s were trading at 100 times earnings,” he said, which is according to him “very different than today.”

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

In case of economic crisis too, the technology sector is in a good place, Maris Ogg, founding principal of Tower Bridge Advisors, thinks. “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.