Apple Stock News: The Race to be the First Trillion Dollar Company May Depend on China

Apple Stock News

The race to get the title of first trillion dollar market cap is getting closer to the finish line.  Apple is sitting pretty with an $868B market cap.  Alphabet Inc. (Google) is in second place at $712B.  Amazon is in third at $556B.  Facebook is in fourth at $512B.  But Apple hasn’t always been in the lead.  It was temporarily overtaken by Alphabet Inc. in 2016.

What makes Apple the favorite in this horserace?  It’s not valuation.  Since Apple’s biggest driver is the iPhone, they are priced more like a hardware company.  That’s why Apple’s PE is 18 whereas Alphabet’s is 37, Amazon’s is 294, and Facebook’s is 34.  Although, Apple is investing heavily in its high growth Services business which could help to increase Apple’s P/E multiple in the future.

The main reason Apple is in first place is the tech giant generates so much darn profit.  They earn the vast majority of the profits of the entire smartphone space.  One significant differentiating factor that has helped them do this is their success in China.  Out of the four tech behemoths mentioned above, Apple is the only one that has truly flourished in the People’s Republic.  China is too big to ignore with 20% of the globe’s population.  In Apple’s 2017 fiscal year, they generated $44.8B in revenue from Greater China.  Even though that number decreased 8% YoY, it still amounted to 20% of Apple’s total revenue.  That 20% figure is much higher than the Chinese revenue generated from the other three tech titans.

Facebook doesn’t operate in China.  Alphabet does operate there, but many of its core services are severely restricted.  Amazon operates there as well, but is not even close to becoming a major player.

The Middle Kingdom’s significance to Apple has definitely incentivized them to keep the Chinese regulators happy.  This results in Apple removing hundreds of VPN apps from the Chinese App Store as well as building a data center in China to house Chinese users’ data.  Apple may not always like the Chinese regulations, but they certainly aren’t pulling out of China anytime soon.

For the latest Apple Stock News, AAPL closed at $169.01 per share on December 6th, 2017. It generated losses of 0.37% from its previous close on December 5th, 2017, when it closed at $169.64 per share.

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Apple Stock News: Google to Pay $3 Billion to Apple to Remain Default Search Engine

Apple Stock News

For the latest Apple Stock News, AAPL closed at $159.85 per share on August 14th, 2017. It generated a return of 1.50% from its previous close on August 11th, 2017, when it closed at $157.48 per share.

apple stock news

Alphabet Inc.’s Google pays Apple Inc. about $3 billion per year, up from just $1 billion three years ago, to remain the default search engine on iOS devices, analysts at Bernstein wrote in research note Monday.

Bernstein’s researcher Toni Sacconaghi pointed to court documents that confirmed that Google paid Apple $1 billion in 2014 as part of an agreement to offer Apple a cut of what Google makes on iPhone and iPad users. “Given that Google payments are nearly all profit for Apple, Google alone may account for 5% of Apple’s total operating profits this year, and may account for 25% of total company OP growth over the last two years,” wrote the Bernstein analyst.

Although $3 billion is a hefty sum, Apple’s market share in the mobile and tablet industries makes the payment worth every cent. Both parties are winning with this deal.

Apple’s service business, is expected  to grow on its own to reach the size of a Fortune 500 company and make up as much as 13% of total revenue in 2017. After digging into the filings and extrapolating for the tech firms’ growth since 2014, Bernstein suggests that Google’s licensing revenue is the largest or second-largest contributor to Apple’s service business growth.

On Sunday, I Know First published an article pointing out the strengths of Apple’s service business. Read it here. 

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Apple Stock News: Developing New AI Chip

Apple Stock News

For the latest Apple Stock News, AAPL closed at $153.61 on Friday, May 26th, 2017. It had a loss of -0.17%  from its previous close of $153.87 per share.

Artificial Intelligence (AI) has been among the most exciting technology to be utilized in recent years. Looking to take artificial intelligence to the next level, Apple is developing, Apple Neural Engine. This new processing chip will expand Apple product’s capabilities beyond Siri. The new processing chip will handle tasks normally used by humans such as facial recognition. Apple first incorporated AI in 2011 when Apple introduced Siri to their smartphones.

Apple is attempting to play catch up with Amazon and Alphabet. Amazon’s Echo and Google’s Home digital assistants has given these companies the edge in utilizing the technology. AI is the future for Apple.  The Apple Neural Engine in an iPhone would relieve demand from its main processing unit and its graphics card. Although this may increase weight, the savings in demand for performance could save in battery life.

The new chip will be discussed at the upcoming developer’s conference in June. Apple is also scheduling to release its latest operating system, the iOS 11.

Keep checking back for more news regarding AAPL. For Full AAPL forecasts and investment advice by our state of the art algorithm click here.

Apple Stock News: Alphabet passed Apple as the most valued company

Apple Stock News

After an amazing report of Alphabet, Apple was displaced by Alphabet as the most valued company in the world. Yesterday, Alphabet reported revenues and earnings better than expected by analysts and its shares went up strongly.

apple stock news

 

The company smashed expectations on both ends, bringing in $21.3 billion in revenue and earnings of $8.67 per share. Analysts were expecting earnings of $8.09 on $20.8 billion in revenue. And with that, Alphabet became the most valuable publicly-traded company in the world, coming in at a market cap $558 billion after jumping about 8% after the company reported its fourth-quarter earnings, and passing Apple, which sits at a market cap of $535 billion. Remember that Apple reported bad numbers last week and its shares fell down. Yesterday, Apple shares lost another 0.95%

There’s a clear narrative here. Alphabet, a software company with a few extra hardware bets, shares have dramatically outperformed those of Apple, a hardware company with a few extra software bets.

Google´s core business continue to grow as well. As to users, the company said that active users of Gmail grew to 1 billion. Talking about Google´s core advertising business, cost per click fell 13% year-over-year, while paid clicks increased 31% in the same period. This has been a trend for Google, as more activity shifts to mobile devices, the value of each advertisement click tends to go down.

Google, too, is still not immune to what’s happening with foreign exchange rates and the general global economy. Revenue was up 18% year-over year, though in constant currency it would have risen $24%. Apple, for example, said there was a difference in $5 billion in revenue if not for foreign exchange rates, and for Google that represents about $1 billion in revenue.

 

Algorithmic Recommendation

I Know First provides daily investment foresight, mainly through stock forecasts via their predictive algorithm. The algorithm incorporates a 15-year database and utilizes it to predict the flow of money across 3,000 markets.

The self-learning algorithm uses artificial intelligence, predictive models based on artificial neural networks, and genetic algorithms to predict money movements within various markets.

I Know First’s algorithm was able to correctly predict the behavior of GOOG’s stock price in the past. Indeed, I Know First wrote few days ago an article about Alphabet talking about its new products, researches and the potential of the company. We recommended buying Alphabet for different terms, as you can see below.

Apple Stock News: Could Alphabet Inc. Overtake Apple Inc.?

Apple Stock News

Apple Stock News

Apple should be worried because the gap between them is getting shorter with time. When we take into account growth momentum and cash stockpiles the gap is in single digits. If you take away Apple’s massive amount of cash of $206 billion, the difference between the two is only about nine percent. If this movement continues, then it appears that Alphabet stock could overcome Apple stock.

Alphabet began with a valuation of $291 billion while Apple started at $491 billion.A strong cash injection from its advertising business through YouTube and on mobile devices caused the stock price to sky-rocket by approximately 38%.

Apple’s stock is only up by about 4% is nowhere near the rise of Alphabets stock. Basically Apples has kept a market pace. The amount of cash that they have has increase by a huge amount. By the end June it was reported that the had a staggering amount of $202.8 billion in liquid cash and market securities.Looking from the perspective of Apple’s market capitalization and net cash position, the company can be valued in the range of $457 billion.

Even though this is a big number we have to remind ourselves that the company started the year with a value of $454 billion. we can see that their value has been static.Having tons of cash on hand is not in and of itself a solid growth strategy. It is shocking to know that just at the beginning of the year the difference between them was almost double.

As we know from the last release of earnings Alphabet Inc beat the estimates.Alphabet has a tiny debt load relative to its size and cash balance of about $73.0 billion. This is three times what the tech giant has spent on various acquisitions in the last decade, this means it is seeing very real returns on its investments.

It’s for these reasons and others that I am confident on the Alphabet stock price, and why I believe it might overtake the Apple stock price to become the world’s biggest company sooner rather than later.