Daniel Ives: Apple Could Hit $2 Trillion Within Three Years

By Amit Chowdhry ● December 30, 2019
  • According to Wedbush Securities managing director of equity research Daniel Ives, Apple could become a $2 trillion company within three years.

Wedbush Securities managing director of equity research Daniel Ives recently issued a report increasing Apple’s price target from $325 to $350. At this price, Apple’s market cap could quickly hit nearly a $1.6 trillion market capitalization based on Apple’s roughly 4.45 billion shares outstanding.

One of the biggest reasons why Ives is bullish on Apple is that the 5G iPhones coming in 2020 is expected to fuel a “supercycle.” That is when a large portion of iPhone owners upgrade due to a major bump in specifications. Apple saw a major supercycle with the release of the iPhone 6 when it made a major bump in the display size.

Currently, Apple has 900 million iPhone users. And Ives cited in the report that 350 million people may consider upgrading their device next year due to the degradation of batteries. Of those 350 million people, 200 million may follow-through and upgrade to a 5G iPhone.

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Ives also told Business Insider that Apple’s market capitalization could hit $2 trillion within three years. This would be assuming that the company avoids a number of setbacks.

And Ives credited Apple CEO Tim Cook for skillfully mitigating potential issues with President Trump’s trade war with China and currency fluctuations that would have affected pricing. Plus Cook also helped settle a legal battle with Qualcomm, which would have otherwise caused problems with securing a steady flow of 5G chips.

“We believe iPhone 11 is just the front end of this current ‘supercycle’ for Cupertino with a slate of 5G smartphones set to be unveiled in September that will open up the floodgates on iPhone upgrades across the board that the Street continues to underestimate,” said Ives in the report via Fool.com. “There are at least five iPhone versions that will launch in 2020 with the main event the 5G launch in September that could include a number of versions/models, although those final specs will not be finalized by Apple likely till the April timeframe with the supply chain (and investors) eagerly awaiting this flagship launch.”

The five models that are expected to be released in 2020 include four different iPhones in the fall and a successor to the iPhone SE in the spring. Ives made supply chain checks and learned that suppliers are anticipating a 10% increase in unit volumes for iPhones in 2020.

However, Goldman Sachs managing director Rod Hall and Loup Ventures managing partner Gene Munster are less bullish about Apple in 2020. Hall believes that the average consumer would not fully understand the benefits of 5G. And Munster believes that carriers are still implementing in the technology so the expectations should not be too high.

Ives is expecting Apple to sell at least 200 million iPhones in fiscal 2021, but that figure could hit as high as 225 million. And between fiscal 2021 and 2022, Apple could sell at least 400 million iPhones. Apple would especially benefit from the increase of the average price per iPhone since the iPhone 6 was released as well. Boosting Apple’s revenue would be the higher price tags associated with 5G devices.