Apple's shift from devices to less tangible services has pushed up its valuation.
As Apple has shifted toward more services, its desirability has risen.
n 2018, the company’s enterprise value was equivalent to 3 times estimated revenue for the year ahead.
Today, at $2.5 trillion including net debt, Chief Executive Tim Cook presides over a firm valued at 6 times sales.
Analysts assume Apple will sell about $300 billion in iPhones and other objects this year.
While the devices have changed, the business hasn’t much, so assume that chunk of business is worth around 5 times sales or around $1.5 trillion.
Deduct that from Apple’s enterprise value, and investors are pricing the services business at $1 trillion, around 10 times forecast revenue.
That’s more than Microsoft, which trades at 8 times and whose revenue growth is similar and remarkably consistent.
Apple said on Feb.2 that revenue for the quarter ending Dec. 31 was $117 billion, a decrease of 5% from the same period the year before.
The iPhone maker said it faced significant supply constraints in the quarter.
Covid-19 lockdowns in China hampered the production of iPhones. Services revenue rose 6% to $20.8 billion.