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With a market cap of over $2.7 trillion, Apple (AAPL) is the world’s largest company. If it were to be a country, Apple would be the world’s eighth biggest nation, based on 2022 nominal GDP. But can the Tim Cook-led company maintain its humongous valuation and keep its status as the world’s biggest company, even through 2025?
Here’s my analysis of what could drive Apple stock over the next couple of years, along with the rivals that could realistically threaten its status as the world’s largest company.
Apple Became the World’s Largest Company in 2011
Apple became the world’s most valuable company in 2011, when it surpassed energy giant ExxonMobil (XOM), which was then holding the title. Since then, the iPhone maker has held on to the position as the world’s largest company for the most part, aside from a few brief incursions.
For instance, in October 2021, Microsoft (MSFT) briefly became the world’s largest company, and in May 2022, energy giant Saudi Aramco claimed the title amid soaring oil prices. However, these have proven to be aberrations, as Apple quickly reclaimed the crown.
Apple has several similarly impressive achievements to its name. In July 2023, the company became the first ever to have a closing market cap of over $3 trillion – adding a new milestone for the Cupertino-based company, which previously set benchmarks as the first company ever to have a market cap of $1 trillion and $2 trillion.
Incidentally, Apple is the biggest holding for Berkshire Hathaway (BRK.B), whose chairman Warren Buffett started buying the shares in the first quarter of 2016. Apple is now the biggest holding for Berkshire - and with a nearly 5.9% stake, the conglomerate is the second biggest Apple shareholder behind Vanguard.
Apple Stock Price Prediction 2025: Key Drivers to Watch
Unless we see a serious global macro shock over the next couple of years, I expect Apple stock to trade higher than current levels by the end of 2025. Wall Street analysts likewise expect the stock to rise to $205.84 over the next 12 months, while the Street-high target price is $240.
Here are the key factors that could drive the stock’s performance over the next few years:
1. U.S.-China Tensions and Demand for Apple Products in China
The growing U.S.-China tensions are a risk for Apple, considering it’s the second biggest market for the company. Jefferies analysts believe that Huawei – whose operations suffered a near-death blow after restrictions by the U.S. – has bounced back and dethroned Apple from the top position in the Chinese smartphone market. If the demand for Apple products wanes in China amid the country’s growing rivalry with the U.S., it could threaten Apple's position as the most valuable company.
2. The Opportunity in India
Earlier this year, Apple opened its first two retail stores in India and the country has now become a top-five market for iPhones. Strong demand in India – which overtook China to become the world’s most populous country, and boasts of a growing and aspirational middle class – could help Apple increase its iPhone shipments. Currently, Android devices account for 95% of the Indian smartphone market, which is the second-largest globally after China. That makes it an attractive market for Apple to increase iPhone penetration levels.
3. Higher Monetization of Existing Apple User Base
One of the key long-term drivers for Apple is its burgeoning user base and ecosystem. It now boasts an installed base of over 2 billion devices, along with the prospect of recurring revenues from 1 billion paid subscriptions.
This vast user base is a captive market for Apple as it diversifies into multiple other industries - including financial services and healthcare. In 2024, Apple will also start delivering its augmented reality headsets, which should further increase its target market.
4. Electric and Autonomous Cars
For years now, Apple has been rumored to be working on electric and autonomous cars under a project that’s codenamed “Titan.” So far, any details about the project have been reported through industry grapevines - but real progress on the project could help drive Apple shares higher, as the total addressable market for electric and autonomous cars is much higher than the smartphone market.
5. Apple Could Also Be an AI Play
While the term “artificial intelligence” hasn’t featured prominently during Apple’s earnings calls, as it does in that of other tech giants, Apple is also an AI play. In response to an analyst question during the fiscal Q3 2023 earnings call on why Apple does not talk much about its AI investments, Cook responded by saying “we view AI and machine learning as core fundamental technologies that are integral to virtually every product that we build.” He added that AI is “absolutely critical to us” and emphasized that Apple has “been doing research across a wide range of AI technologies, including generative AI for years.”
These Companies Might Surpass Apple in Size
Meanwhile, even though I believe that Apple should be able to protect its crown as the most valuable company until 2025, here are the other companies that are strong contenders for the top spot:
- Microsoft: The Windows-maker has been expanding its total addressable market through both organic and inorganic strategies – the most recent examples of the latter being its acquisition of Activision-Blizzard and investments in ChatGPT’s parent company OpenAI. Microsoft (MSFT) is currently the second-largest company globally, and is a strong contender for the top spot.
- Tesla: Tesla (TSLA) CEO Elon Musk believes that the company’s market cap could surpass the combined market cap of Apple and Saudi Aramco. Its market cap is already the highest among automakers, and progress towards full autonomy of its cars - coupled with continued buying interest from retail investors - could help catapult TSLA toward “most valued company” status.
- Amazon: While Amazon's (AMZN) stock has underperformed its tech peers over the last couple of years, it is among the contenders to become the world’s biggest company, considering its strong position in industries like e-commerce, cloud, streaming, and digital advertising.
