Investors have pondered for years what the first trillion dollar company in the US would be. On Thursday, the conversation was put to rest as Apple (AAPL - Free Report) reached the milestone, over 42 years since its storied inception.
Apple was pushed over the edge by a strong earnings report that saw flat iPhone sales but a significant boost in services revenue. Apple posted $2.34 in earnings per share, crushing the Zacks Consensus Estimate by 17 cents and surging 40.4% year-over-year, reaching a new June record. Revenues for the quarter stood at $53.3 billion, surpassing our estimate of $52.34 billion and increasing 17% from the year-ago quarter.
Although Apple sold only a few hundred more iPhones than it did a year ago, segment revenues were 20% higher. This was thanks to a 19.5% boost in the average selling price of an iPhone to $724 during the quarter. CEO Tim Cook noted on a call with analysts that the premium-priced iPhone X was the firm’s best-selling model since its launch last year.
Investors were reassured by a new all-time best performance in Apple’s services segment, which includes revenues from the app store, Apple Music, AppleCare, Apple Pay, and licensing, along with other services. The segment soared 31% year-over-year to reach $9.55 billion in revenue, beating our estimate and accounting for 17.9% of total sales.
To reach $1 trillion in market cap, Apple shares initially needed to hit $203.45. However, the target changed to $207.05 as stock buybacks bumped the threshold higher. Apple would briefly reach this point in afternoon trading Thursday before ticking back down. Apple had opened at $200.58, down 0.5% from Wednesday’s closing price of $201.50.
Apple currently sits at a Zacks Rank #2 (Buy).
Moving forward, investor eyes will be on Amazon (AMZN - Free Report) and Alphabet (GOOGL - Free Report) as the next big names to reach the trillion-dollar mark. Both firms have been on a spree of solid earnings reports, and boast market caps of above $880 billion and $860 billion, respectively.
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