Apple Inc. has gone where no company has ever been before, nearing the $625-billion (U.S.) mark in stock market value amid a surge of optimism about its next wave of products.
The Cupertino, Calif., company broke Microsoft Corp.'s previous record, set in 1999 during the technology bubble, to become the most valuable public company ever, in nominal terms. The latest rally, which has seen the stock rise about 16 per cent since July 25, represents a turn in sentiment since it disclosed third-quarter earnings that disappointed some investors.
Apple's recent performance has aided a market surge, propelling the Nasdaq composite index and the Standard & Poor's 500 to near their 2012 highs. The S&P closed the day at 1,418, one point shy of its April peak.
What's driving Apple shares upward, it appears, is the same thing that is damaging rivals such as Research In Motion Ltd: the prospect of a sleek new version of the iPhone hitting the market next month.
"There have been plenty of leaked parts pictured on the Internet and Apple is expected to announce details of the new smartphone as early as Sept. 12," said Kris Thompson, an analyst with National Bank Financial. "The iPhone 5 may be in my hands as early as Sept. 21."
While not unexpected, that is not good news for RIM, which has struggled to come up with a consumer smartphone that is competitive with the iPhone and devices running Google Inc.'s Android software. RIM's next-generation phones, the BlackBerry 10 line, have been repeatedly delayed and will not be available until early 2013.
For a moment this summer, it seemed Apple might actually be coming down from six years of meteoric sales and profit growth. The company missed analyst expectations when it reported its most recent quarterly earnings. As a result, Apple's share price took a short-term hit, falling to $574.97 the next day. It closed at $665.15 on Monday.
But Apple's disappointing earnings were largely due to the number of consumers holding off on buying a current-generation iPhone because a new version of the phone is due out this fall. And instead of avoiding the stock, investors appear to be jumping on Apple shares now in anticipation of a blockbuster end of the year once the new phone does come out.
And although Mr. Thompson notes that Apple has seen a recent surge of competition from Samsung, which has built a technically more powerful device with the Samsung Galaxy S3, few on Wall or Bay Street are predicting that Apple's next phone will be a failure – even if expectations may be getting out of hand.
"Obviously Apple's going to have a lot of success with its iPhone 5, it's also widely expected that it's going to come this fall, so you just have to be cautious of expectations getting ahead of reality," said Colin Gillis, senior technology analyst at BGC Financial LP in New York.
"There's already talk about the iPhone 5 selling 250 million units. ... In reality, it will probably be a little thinner, a little faster, a little bigger. It's not likely to mow your lawn."
For Apple, the news couldn't be better. Not only does the company's share price continue to defy gravity, but the anticipated launch of the new iPhone, a smaller iPad and a media storage and consumption product called iTV in the next few months means Apple's near future looks very bright.
Indeed, Jefferies analyst Peter Misek recently said he believes the iPhone 5 launch, expected this fall, will be the biggest smartphone launch in history.