For a brief moment, Apple's (Nasdaq: AAPL) market cap exceeded $3 trillion as the stock had a strong start to 2022.
Overall, Apple was up 2.5%, and the stock closed at an all-time high. This follows a nearly 40% gain in 2021 (including dividends) as the company was able to continue its positive momentum in terms of earnings growth and gains in several categories. The only company close to Apple's valuation are Microsoft (Nasdaq: MSFT) which is also closing in on $3 trillion and Saudi Aramco which could reach similar stratospheric levels if oil prices keep climbing.
While the iPhone indisputably remains the company's crown jewel, another recent catalyst has been the growth and success of the "Apple ecosystem" which includes many of the additional subscriptions and services that the company offers. While it remains a small segment of Apple's overall revenue, it's one of the fastest-growing areas and can garner higher multiples due to the higher margins and rates of recurring revenue. Some of these include AppleCare, the app store, Apple TV+, and Apple Music.
Apple is also uniquely positioned as a stock that benefits from a strong economy as its products are highly desirable which means that when consumer spending increases, some portion of it flows into Apple's coffers. This is what happened with the stimulus payments with some attributing about a third of Apple's revenue growth to these payments.
On the other hand, Apple's stock also has some defensive characteristics. Its revenues are less negatively affected by a slowdown in the economy given the ubiquitousness and popularity of its products. The company's large balance sheet and dividend payments also mean that it would likely see inflows from a drop in interest rates which would be likely with a slowing economy.
It also marks a successful decade for Tim Cook who took over as CEO from founder Steve Jobs. At the time, many doubted that Cook would be able to replicate Jobs' success especially given that he was more of an operator rather than an innovator. However, Cook has easily dispelled these notions.