A $3.4 Trillion Opportunity for Apple (AAPL)

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Apple Inc. (NASDAQ:AAPL) is set to become history’s first trillion-dollar company faster than the market thinks, thanks to AAPL opportunities in cars wearable computers and TV.

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At least that’s the opinion of one very bullish analyst. Morgan Stanley Katy Huberty raised her price target on Apple stock to $160, up from $133, but that’s really just getting started.

That’s because as big as AAPL may be, it has a chance to dominate markets that dwarf where it currently competes. Indeed, if Huberty is right, Apple stock has a long way to go, if the company so chooses.

As much as currency as the Apple brand carries in smartphones and personal computers, there are trillions in market opportunities just waiting for the company to go after. Most recently, all the buzz has been about AAPL getting into the car business, and reports have it that its hiring talent formerly of Tesla Motors Inc (NASDAQ:TSLA), the super-hot electric car company.

It sounds farfetched to plenty of investors and market watchers — what does AAPL know about the car business? — but as Huberty points out, the potential in such an endeavor is too great to ignore.

By the analyst’s calculation, the car market is worth $1.6 trillion. That’s four times as large as the global smartphone market ($400 billion). Apple obviously won’t claim all of this market (there’s plenty of competition after all), but if it can grab just a slice … well, that’s a lot of growth right there.

But that’s not where the opportunity ends. Huberty figures that the addressable global TV market is greater than $800 billion, while the market for wearable technology like the Apple Watch comes to $150 billion.

Add it all up, and if AAPL choses to do so, it could compete in markets worth $3.4 trillion. As of now, AAPL competes for dollars in a market worth “just” $800 billion, the analyst notes.

According to Huberty’s view, the law of large numbers doesn’t have to apply to AAPL at all. Sure, it might be hard to grow off a base of $750 billion, but not necessarily if there are untapped trillions in revenue potential out there.

No Slam Dunk for AAPL

Whether AAPL choses to go after these markets is entirely something else. It may seem like Apple can do no wrong, but no company is infallible. The market for wearable technology could be vastly overestimated for one thing. It’s also quite possible that AAPL’s premium products will capture just a small part of it.

Furthermore, investors and fanboys have been waiting for Apple to get into the TV market — beyond what it currently has on hand — for years. Steve Jobs told his biographer that he “cracked” the secret to a connected TV before he died in 2011. Rumors to the contrary, we haven’t seen anything from AAPL yet.

And as for an Apple Car? The electric car market is still very much handicapped by battery technology and related limitations with range. And even if technology can overcome that problem in the next few years, it won’t be a gimme for Apple to compete in the car market.

One of the biggest hurdles to AAPL making its own car is that it’s not a manufacturing company. Indeed, it doesn’t “make” anything. Its products are assembled by original equipment manufacturers overseas. It’s hard to see another car company agreeing to manufacture cars for a company that’s looking to eat its lunch, so is Apple going to open its own factories?

Apple certainly does appear to have plenty of growth left in it. There’s no law that says a company can’t have a market cap of $1 trillion or more. But it’s one thing to dream about new markets for Apple and quite another for the company to own them.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/03/apple-aapl-stock-2/.

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