SAN FRANCISCO: Apple is on the verge of becoming the first US$1 trillion publicly listed US company, but even if it gets there, it could soon be overtaken as Amazon.com surges from behind.
Started in the garage of co-founder Steve Jobs in 1976, the iPhone maker's annual revenue has ballooned to US$229 billion, greater than the gross domestic product of countries including Portugal and New Zealand.
Apple's market capitalisation on May 10 topped a record US$934 billion, following its unveiling last week of a US$100 billion buyback budget and news that Warren Buffett's Berkshire Hathaway dramatically increased its stake in the company.
Thanks to a 12 per cent rally since its quarterly report last Tuesday, the Cupertino, California company is just 8 per cent short of hitting the US$1 trillion valuation mark.
But Apple is in danger of being beaten to the US$1 trillion mark — or passed soon after — by Amazon.com, the second largest listed US company by market value, at US$780 billion.
While US$148 billion smaller than Apple on Friday, Amazon of late has expanded its stock price, and its sales, much more quickly than Apple.
Amazon's stock is red hot, trading recently at over 100 times expected earnings, compared to more-profitable — but slower growing — Apple's valuation of 15 times earnings.
Apple's stock has risen 24 per cent over the past year, fuelled by optimism about the iPhone X, the company's latest smartphone. But demand for the US$1,000 device has underwhelmed investors, and bulls are now focused on Apple's plan to return more cash to shareholders.
By comparison, Amazon's stock has surged 70 per cent over the past 12 months, bolstered by 31 per cent revenue growth as more shopping moves online and businesses shift their IT departments to the cloud, where Amazon Web Services leads the market.
Amazon is also competing more with Apple and Google owner Alphabet as it sells music and video content, its Fire TV device and its Alexa smart home gadget.
At US$765 billion, Alphabet has the third largest market capitalisation on Wall Street, with Microsoft close behind at US$749 billion. Amazon breezed past both them both in February.
Including Facebook, the five largest listed US companies now account for 15 per cent of the S&P 500's US$24 trillion market capitalisation. – REUTERS