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Apple (APPL) bull expects iPhone maker to hit $3 trillion market cap in 2022 

Varied fashions of the Apple Inc. iPad on the firm’s Yeouido retailer throughout its opening in Seoul, South Korea, on Friday, Feb. 26, 2021.

Jean Chung | Bloomberg | Getty Pictures

Apple might hit a $3 trillion market capitalization in 2022, based on Wedbush analyst Dan Ives, who’s bullish on the tech big.

The iPhone maker’s shares are down about 5% year-to-date. Earlier this yr, traders dumped the corporate’s shares following a historic December quarter.

Apple is the world’s most respected firm with a present market cap of round $2.1 trillion. It crossed the primary trillion in 2018 and the $2 trillion mark in 2020. Analysts, together with Ives, have beforehand talked about Apple’s roadmap to the document $3 trillion mark.

“We predict in the end 12 to 18 months from now,” Ives advised CNBC’s “Avenue Indicators Asia” on Tuesday when requested a few potential timeline to the subsequent milestone.

“If you happen to have a look at the innovation, in case you have a look at the supercycle taking part in out within the providers enterprise proper now, I imagine that is simply kind of the subsequent stage of progress,” Ives mentioned, including it’s set to show to skeptics that Apple stays targeted on innovation.

In late April, Ives elevated Apple’s value goal from $175 a share to $185, sustaining an outperform ranking on the inventory. Apple’s shares closed at $125.90 per share throughout regular buying and selling hours on Monday.

Software program providers

Apple has been considered as a {hardware} firm for years whereas CEO Tim Cook dinner pushed the narrative that the agency’s iOS working system has a providers ecosystem — constructed round a base of multiple billion system customers — that is an enormous a part of its future.

However the mixture of {hardware} and software program has developed and in 2020, the tech big obtained its largest endorsement from Wall Avenue and traders.

Ives values Apple’s software program providers enterprise at about $1 trillion in the intervening time, and expects it to extend to about $1.5 trillion to ensure that the corporate’s market worth to hit $3 trillion.

“They’ve put an iron fence round their set up base, proceed to monetize it, and the bears and skeptics will proceed to doubt them,” he mentioned.

He mentioned Apple continues to “show them incorrect.” He added: “Which is why after I look across the nook, regardless of this digestion interval, I see a $3 trillion market cap (in) 2022.”

At its Worldwide Builders Convention, or WWDC, on Monday, the firm confirmed off a slew of recent updates for Apple’s main merchandise. It included the iOS 15 — the newest model of the iPhone working system.

New iPhones are additionally anticipated later this yr, whereas an Apple Automobile can be within the works.

Ives mentioned that in the intervening time, Apple is laying the muse for the subsequent stage of progress the place software program and providers play necessary roles.

Dangers to the $3 trillion goal

There are a number of potential dangers that would hinder Apple from reaching the historic $3 trillion market capitalization, based on Ives.

They embody a courtroom battle with Epic Video games, maker of the favored online game Fortnite, the place Cook dinner confronted sharp questioning from the decide final month.

Final yr, Apple eliminated Fortnite from its iPhone App Retailer, saying that the sport violated its tips for its software program distribution platform. Epic Video games responded by submitting a lawsuit inside hours, accusing Apple of anti-competitive conduct. Apple then filed counterclaims and responses, searching for damages for Epic Video games’ breach of contract.

Ives additionally pointed to rising regulatory scrutiny all over the world. The European Fee mentioned in April that the iPhone maker “abused its dominant place” within the distribution of music streaming apps by means of its Apps Retailer.

CNBC’s Eric Rosenbaum contributed to this report.

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