Why I believe Apple will win the race to $2 trillion

Apple is my favourite to win the race to become the world’s first two trillion dollar company: part of the reason is healthtech, but there is a reason why I specifically think it is Apple that can win the prize, and it relates to its halo.

Article updated: 18 April 2019 10:00am Author: Michael Baxter

Apple to reach $2TN

“At Apple, we believe privacy is a fundamental human right” — so begins the wording of the company’s privacy policy. There are lots of reasons to think healthtech can throw up a $2 trillion company, the above words illustrate why I think that the first company to get there will be Apple.

I will return to why this is so important in a moment, but first I want to recite a lesson from history.

In 1997, Apple went close to failing. As a company it had always generated more PR relative to its size than its rivals. I suspect that this is because it had carved out a niche for itself in the world of media — clever move that, make the press love you, and they will write about you.

In that year, however, after a string of disastrous products that were meant to change the world, products such as the Newton and the Pippin, but in reality barely changed a single lunchtime, the company had to court attention from the enemy. In 1997, at an Apple PR spectacular, the atmosphere turned to ice as the words of Bill Gates were heard. The Microsoft CEO was revealing details about a Microsoft/Apple collaboration. The return of Steve Jobs was announced at that event too — as far as Apple aficionados were concerned, the devil and the prodigal son both spoke at the same event.

But was it enough? Four years later, the Apple share price was down to close to $1, almost a third of the price back during the Apple heyday in the early 1990s.

As I write, Apple’s share price is at $203, within spitting distance of a market cap of one trillion again — around 15 per cent off its all time high, but up by almost a half since January.

This all begs two questions. How did the company manage the miraculous turnaround after 2001, and why have shares risen so sharply in recent weeks? In a funny way, the answer to both questions is the same.

Let me explain.

At the dawn of this century, Apple had one fundamental strength, namely the preoccupation its founder and CEO had with design. That strength combined with certain technologies creating a kind of tipping point. Moore’s Law had created computing power strong enough to realise Jobs vision. The homogenisation of components meant products such as the iPod and iPhone could be made at a cost that meant they could command a price that was suitable for the mass market. And then the rise of WiFi and then 3G and 4G made the iPhone the product it is today. Without those things — processing power, homogenisation of components and wireless internet, I suspect Apple would have ceased to exist by now, and Kodak would still dominate photography.

There are parallels with today

These are the changes that have either occurred or are occurring.

  • Continued advances in computer power,
  • The creation of massive volumes of data, thanks to the internet and now the internet of things,
  • Advances in AI, in particular machine learning. Machine learning is a practical subset of AI, it entails algorithms learning from data. Machine learning is extremely data hungry?
  • Cloud computing, meaning companies can access machine learning techniques applying a pay as you go model — SaaS, software as a service
  • 5G, which, when it rolls out, will create an order of magnitude more data than is currently available.

As a result of these factors we will see convergence, and a new generation of computing devices will emerge.

Healthtech will be the most exciting application. All of a sudden, machine learning, 5G, genome sequencing and data collected from highly sensitive sensors embedded in wearable devices will revolutionise the health industry — it could even save the NHS.

Earlier this year, Apple’s current CEO Tim Cook said: “Apple's most-important contribution to mankind has been in health.”

Recently, Morgan Stanley projected that healthcare could potentially boost Apple’s annual turnover by $313 billion by 2027.

So why Apple?

Well, at the turn of this century it was Apple’s design emphasis which combined with wider non company specific changes that saw its share price rise almost 200-fold.

Today, it is the perception that Apple respects our privacy, unlike most of its main tech rivals. Such a perception may or may not be justified, but it is there, all the same and Tim Cook has made it his business to make privacy Apple’s key unique selling point.

And in the healthtech arena, where data is vital, privacy fears are the biggest block. Consumers are, understandably, fearful of letting companies process their private data about their health.

In such an environment trust will be vital and trust is what Apple enjoys in bucketloads.

These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees

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Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.

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