Tech investor Gene Munster told CNBC on Thursday that he sees a reasonable path for Apple to reach a market cap of $ 3 trillion in the future.
The iPhone maker became the first publicly traded US company to hit a $ 2 trillion market cap in August – a milestone that Munster foresaw in January, when he called for the stock to get 50% higher. As of Thursday, with a share of about $ 133 per share, Apple was valued at nearly $ 2.3 trillion.
Munster, who covered Apple as long-time analyst at investment bank Piper Jaffray, said in “Squawk Box” that he believes the California-based company can realistically reach $ 200 a share. That would bring its market cap to more than $ 3 trillion.
“It needs to be anchored in revenue. That’s the powerful piece on the Apple story,” said Munster, co-founder of venture capital firm Loup Ventures. He said his prediction is based on Apple trading at a price-to-earnings ratio, or multiple, of 35 for 2022 earnings estimates.
“It’s been a year, but I’m accelerating the talk into the middle half of next year, and we’ll talk about 2022. If the market can support these 35 multiples – you know, we’re not talking about this an Amazon-like multiple – I think that path is there, ”Munster said.
Apple’s current price-earnings ratio is close to 41, after its stock is up about 81% this year. Amazon, which has seen its shares rise about 76% this year, trades at about 95-fold.
One catalyst that could help Apple move up the ladder is greater acceptance of remote work, spurred by the coronavirus pandemic, Munster said.
“This is generally seen as a game on the iPhone, a 5G game. That’s good. That will affect the numbers in a positive way, but I think this acceleration of digital transformation is powerful,” said Munster. “People who work anywhere will arm themselves for the next 12 to 24 months and buy more Macs, iPads and services.”
Munster also reiterated his belief that Apple’s multiple could withstand further expansion as investors rethink the company, which in recent years has pushed to generate more revenue from services to increase hardware sales.
For his part, Munster said he thinks Apple could use its hardware business for a service, such as buying a Mac with a subscription. “We think that’s coming, and talking more about cars is a big opportunity for Apple’s multitude,” Munster said, referring to reports that Apple may be making an electric car in a few years.
More broadly, he said he believes Apple will continue its strong stock performance in 2021, especially when compared to its so-called FAANG brethren. In addition to Apple, the group of technology companies also includes Amazon, Facebook, Google parent company Alphabet and Netflix.
“We think FAANG will break even further,” Munster said, while Facebook and Netflix lagged behind Apple and Amazon. “I think the 2021 show will come from Apple again. It might seem deaf for a company to run FAANG for three consecutive years, but I think it will. I think this is heading towards $ 200. [per share]. “