After a difficult first half of the year in which hundreds of billions of dollars in market value vanished, Apple is back in its usual position as the market leader, and private investors are a key factor in the comeback.
Shares of the iPhone manufacturer have increased 27% since mid-June, outperforming both the S&P 500 Index and the Nasdaq 100 Index. As a result, Apple is now once again the most valuable firm in the world and is close to posting a profit for the year as a result. Currently, Apple is only down 7.2% in 2022, versus a decline of 19% for the Nasdaq 100.
After Apple’s quarterly earnings were better than anticipated, its shares enjoyed a relief rally, and their continued strength underscores Wall Street’s confidence in the company’s capacity to continue generating significant profits. Individual investors have rushed to the stock, helping to spark recent rises in speculative areas of the market.
Data scientist Lucas Mantle at Vanda Research, which tracks investor posture, stated that “retail investors have been strong buyers of Apple over the past couple of months, first seeking to buy the fall, then buying into the recent recovery.”
Data from Vanda Research shows that over the previous month, Apple has frequently been among the stocks most frequently bought by that group.
Apple’s profit forecasts have remained constant, while those for other mega-cap companies and the technology industry more broadly have decreased. This is despite worries about a future recession in the US and dangers associated with supply chains in China.
According to information gathered by Bloomberg, the average forecast for Apple’s earnings-per-share for the upcoming year has decreased by less than 1% over the past month, compared to drops of approximately 4% for Microsoft and 7% for Amazon.
Apple’s enormous cash flows, which have enabled the corporation to return more than $80 billion to shareholders in the form of dividends and share repurchases in the first three quarters of the current fiscal year, are undoubtedly enticing to mom-and-pop traders.
However, obtaining a share of that cash geyser is not free. The 10-year average is 17 times, but Apple is currently trading at a much higher 26 times, with profits expected over the next 12 months. The S&P 500, in contrast, is valued at roughly 17.5 times profits.
With a market capitalization of $2.6 trillion, Apple once again eclipsed Saudi Aramco, the world’s largest oil corporation, in July. The $3 trillion valuation, which only a few months ago appeared like an almost unattainable goal, is now 13% away.