Despite reporting some underwhelming iPhone sales and persistent headwinds in its operations in China, shares of Apple Inc. (NASDAQ:AAPL) surged higher on Monday, pushing its market capitalization past $800 billion for the first time. AAPL stock is up 3% to a new record above $153 per share as I write this.
Thanks to its heavy weighting in the major market indices — it’s worth 12% of the Nasdaq-100, for instance — the tech giant is single-handedly keeping Wall Street afloat in trading while the rest of the market drifts lower. As I write this, decliners are outpacing advancers by 20% on the New York Stock Exchange.
There are a few catalysts for the move today.
The Bullish Drivers for AAPL Stock
For one, Warren Buffett praised the iPhone, calling it a “very, very, very valuable product” despite his admittance that he doesn’t “get” tech. Buffett now maintains a nearly $19.2 billion stake in the company via Berkshire Hathaway Inc. (NYSE:BRK.A, NYSE:BRK.B) — that’s triple where his stake was in December.
Also contributing to the rise in Apple stock are reports that production of the upcoming iPhone 8 is on schedule. According to Digitimes, citing an article in the Chinese-language Economic Daily News, the new handset will be unveiled in September before going on sale in October. Previous reports had speculated a production delay because of yield issues on certain microprocessor components from Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM).
And finally, investors continue to be excited about the very impressive growth in App Store revenue as Apple’s focus shifts from growing the iPhone userbase to milking its broad market share penetration. Last quarter, App Store revenue increased 40% year-over-year.
Looking ahead, Drexel Hamilton’s Brian White slapped a $202 price target on AAPL stock this morning, on the curious belief that “Apple remains among the most underappreciated stocks in the world,” which seems like classic late-cycle hyperbole.
But if White is correct, that would give Apple a $1 trillion-plus market cap.
Much depends on the success of the iPhone 8 after the tepid response to the incremental iPhone 7 — which continued the 3-year-old iPhone 6 form factor and infamously removed the headphone jack in an act of “courage” according to the company.
But today, momentum clearly belongs to AAPL stock longs.