Every company out there has been hit by the pandemic. While some have sunk or have been trying to stay afloat, tech giant Apple has had no issues emerging top. They recently announced that they had become the first US company to reach US$2 trillion in market value and it is a show of how tech giants have benefited from the upheaval of the coronavirus.
The company had previously become the first giant to hit US$1 trillion in market value in March 2018. It is followed by other technology companies, including Amazon, Microsoft and Google parent Alphabet, all of which now have more than US$1 trillion in market value.
Shares in Apple have roughly doubled from March lows, an astonishing performance which has lifted chief executive Tim Cook’s net worth to $US1 billion for the first time, according to a Bloomberg Billionaires Index calculation.
Even as other large tech firms have shot higher on robust demand during lockdowns, Apple has outpaced its rivals by delivering strong sales of gadgetry including wearables and tablets, along with new apps and services which have gained ground during the global health crisis.
“Apple has been wildly successful in building out its platforms, mitigating the fact that iPhone sales had peaked, by building products that surround it and services that enhance it,” said Avi Greengart, analyst with the consultancy Techsponential. “It all feeds back into the cycle for Apple.”
In the past quarter ending in June, Apple reported profits climbed 8% to US$11.2 billion and revenues jumped 11% to US$59.7 billion.
A major factor in Apple’s success has been leadership from Tim Cook, who took over just ahead of the death of Steve Jobs in 2011.
“He didn’t invent anything, but what he has done is keep a firm hand on the tiller, steering the ship and keeping the culture intact,” said analyst Laura Martin at Needham & Company. “He deserves a lot of credit for making the most out of Steve Jobs’s inventions.”
Apple’s rise comes amid a broader rally in technology shares as employees around the country shift to working at home amid the coronavirus pandemic and social distancing protocols.
Due to a rise in working from home, Apple enjoyed a modest rise in smartphone revenue and robust increases in sales of iPads and Mac computers amid elevated demand for remote education and work-from-home buyers in the most recent quarter, . The company also benefited from services such as digital payments and streaming and from increased sales in smartwatches because of a rise in interest in health and fitness applications.
With success comes scrutiny
The ascendancy of Apple and other tech giants has prompted increased oversight from regulators and lawmakers, including on Capitol Hill, where Mark Zuckerberg of Facebook, Jeff Bezos of Amazon, Tim Cook of Apple and Sundar Pichai of Google – were summoned to testify at the US House of Representatives’ antitrust subcommittee in late July.
Representative David Cicilline, a Democrat from Rhode Island who chairs the panel that convened the hearing and said, “Simply put, they have too much power.” During the session, Cook faced tough questioning over the market power of the company’s App Store and its treatment of developers.
Analysts expect more scrutiny ahead for Apple and the other giants, but it isn’t clear yet whether the questioning will lead to meaningful change. Some analysts believe efforts to break up tech giants or otherwise reign them in could gain momentum if the Democrats sweep the 2020 elections.
Another wildcard for Apple involves risks from heightened tensions between the United States and China, since Apple not only manufactures iPhones and other products there, but also relies on that market for a large chunk of sales, Greengart noted. US President Donald Trump has been ratcheting up pressure on Beijing through restrictions on leading Chinese tech firms. Analysts say that any retaliation against Washington by China could cause troubles for Apple.
Shares of Apple finished at US$462.83, up 0.1% but just under US$2 trillion.
Source: AFP Relax News