Quote:
Originally Posted by BayMoWe335
It’s trading at that multiple based on 2019 estimates, so it is a look forward. Apple makes 3X the profit of Microsoft and Google and has a similar market cap. Apple is dirt cheap by any measure and the discounted multiple is based on it being a “hardware” company, but that is changing with a $40B services business growing at 25%.
There is no real data showing consumers are “resisting” higher priced iPhones. Every article on that is speculation. The quarter Apple just put up shows people are buying iPhones for much higher ASPs than before, with no loss in unit sales.
Apple sold 218M iPhones in 2018 at $760 each and 217M in 2017 at $650 each. Pricing power in real numbers.
If Apple puts up a disappointing quarter in Christmas and the real data shows a revenue drop, ill start changing my thought process. Fake stores around iPhone demand are normal during this year, designed to manipulate the stock and are always proven false in the real data. Same thing was said about iPhone X last year and iPhone 7 prior to that. Apple always delivers the earnings, period.
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You do have a blind spot on AAPL versus others. Your fundamental analysis of AAPL isn't wrong, but the immediate need to be dismissive of the trading levels of MSFT or AMZN to justify your point of view is.
MSFT and AMZN are exceptionally well positioned from a forward looking perspective. They are the largest two cloud services providers and they are enjoying huge growth in the sector. While in the consumer AI space, MSFT clearly runs behind AMZN/Google, in the underlying tech space it is very advanced and well positioned in both AI and IoT. AMZN is not only the world's largest cloud services provider, they are also the world's largest advertising platform. Neither AMZN nor MSFT are inappropriately valued at their current trading levels with a forward outlook. 2018 projected revenues for MSFT are $124 billion and $137 billion for 2019. AMZN's are $236 billion and $280 billion respectively. The trading value respects this growth.
I am not arguing that AAPL is overvalued. I'm in the minority, Tim Cook is the best thing to happen to AAPL in decades. While he lacks the marketing sleight of hand of Steve Jobs, he's a substantially better businessman (not to mention a better human being). He is as profoundly important to AAPL as Satya Nadella has been to MSFT.
As to general gist of the thread, there is significant reason to worry about the US economy and market. The decision to stimulate a healthily growing economy will have significant negative repercussions. Further, the decision by so many companies to use the stimulus for non-stimulating purposes (eg. stock buybacks) as opposed to allowing overdue wage growth (for example) results in just more wealth concentration which does nothing to improve fiscal or economic fundamentals. I don't know what the outcome will be ... just that it won't be good.