Apple's profit last quarter was 143% of Amazon's lifetime earnings
With a market capitalization of $943.4 billion at the end of last week, Apple is now just a 6% rally away from becoming the world's first $1 trillion public company. Amazon, which many felt would overtake Apple to reach the one trillion mark first, needs to see its shares rally 29% to reach the 13 figure mark. But Apple's shares really popped since the beginning of this month, thanks to two events.
Apple reported its earnings on May 1st, during which CEO Tim Cook soothed investors' nerves about Apple iPhone X demand. The executive noted that the tenth anniversary model has been the top selling iPhone since the release of the premium unit in November. This was followed by the news that Warren Buffet added 75 million shares of Apple to his portfolio from January through March.
If there is a Good Housekeeping Seal for stocks, Buffet's involvement in a company is it. One of the richest men in the world, Buffet usually shies away from technology. But Apple's bottom line drew him in. Talking to CNBC earlier this month, Buffet noted that Apple is the most profitable public company in the U.S. and makes more than twice as much as the second most profitable publicly traded U.S. firm.
While Buffet has publicly acknowledged missing the boat on Amazon, consider this amazing statistic. The $13.8 billion profit that Apple reported for the three-month period that ended in March is 43% more than the $9.6 billion earned by Amazon since the creation of the company in 1995. After a series of losses, Amazon finally went into the black during the fourth quarter of 2003.
Buffet is said to value current earnings more than analysts' usually overly optimistic forecasts. The investor himself said back in 1995 that "I think it's fair to say, we've never looked at a [analyst] projection in connection with either a security we've bought or a business we've bought." And that would mean he probably never read the report by Goldman Sachs analyst Heath Terry on Amazon. Sent to Goldman clients last month, the report says that Amazon is being undervalued by the market despite its future potential.
As far as Apple is concerned, there will come a time when iPhone sales can no longer do the heavy lifting. Some believe that this is happening now, although the company still sold 3.1% more phones than it did during the same quarter last year. While growth in Services is expected to help, a new product will be needed. According to former Piper Jaffray analyst and current venture capital executive Gene Munster, that will be the Apple Glasses. Munster, who has followed Apple for years, recently said that the company has entered a new era that is not dependent on iPhone sales.