Apple is the Most Valuable Company in History

 

Apple (Nasdaq: AAPL)  is now the most valuable company in history.

In terms of market capitalization, Apple became the most valuable company on Monday, August 20th, 2012.

Yesterday, heading into the final hour of trade, the stock had risen more than 2%, which gave the company a market cap of more than $620 billion with shares trading over $662.00 apiece.

I believe the reason the stock is doing exceptionally well is the rumors of the iPhone 5 being announced very soon. Also, there has been a lot of buzz around an iPad Mini that is rumored to come into the market. Also the Wall Street Journal has reported works with Apple and Comcast working together with Apple’s “Apple TV”.

Who did Apple replace as most valuable company? Microsoft. (Nasdaq: MSFT) Microsoft was the previous record-holder in terms of aggregate market-cap. Microsoft hit its all time high on December 30, 1999, which was at the height of the technology bubble.

Apple’s achievement does not take into account inflation, however, and Microsoft was well more valuable on an inflation-adjusted basis in December 1999. With that said, if we keep inflation in mind, Microsoft’s’ market-cap would be over $850 billion, however the company has a market-cap of about $257 billion.

Over the last 10 years, Microsoft has risen 23%, but the stock has been largely range-bound, since falling from its all time high. In terms of value, Apple’s market-cap would need to rise around another 37% to become the most valuable company ever, when adjusting for inflation.

It could be instructive for investors to consider the trajectory of Microsoft, as it could end up being comparable to Apple.

Given the company’s unbelievable innovation over the last few years, and the subsequent mountains of cash that it has earned as a result, the likely catalyst for the stock to eventually peak and decline will be Apple’s inability to continue to innovate at its current pace.

Certainly, this is likely to happen at some point as the company confronts the burdens of stunning success in a relatively short period of time. In the current environment, however, Apple is showing few signs of slowing down and could very easily make a run at becoming the most valuable company in history in both absolute and inflation-adjusted terms.

I hope they make it, do you?

 

 

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