Technology investor Gene Munster told CNBC on Thursday that he sees a reasonable path for Apple to reach a $ 3 trillion market capitalization in the future.
The iPhone maker became the first U.S. listed company to hit a $ 2 trillion market cap in August, a milestone Munster predicted in January, when it argued that shares would be 50% higher. As of Thursday, with shares of about $ 133 a share, Apple was valued at nearly $ 2.3 trillion.
Munster, which hedged Apple as a longtime analyst at investment bank Piper Jaffray, told Squawk Box that it believes the California-based company could reach $ 200 per share actually. That would mean a market cap in excess of $ 3 trillion.
“It has to be anchored in profits. This is the powerful piece of Apple’s history,” said Munster, who co-founded venture capital firm Loup Ventures. He said his prediction is based on Apple’s trade at a price-to-earnings ratio, or multiple, of 35 for 2022 earnings estimates
“A year ago, but I’m quickly advancing the conversation towards the middle and half of next year and right now we’re going to talk about 2022. If the market can keep those 35 multiples, you know, I’m not talking about a multiple similar to the Amazon: I think that path is there, ”Munster said.
Apple’s current price-to-earnings ratio is nearly 41, after shares soared around 81% this year. Amazon, which has seen its shares increase by about 76% this year, is trading at approximately a multiple of 95.
One catalyst that could help propel Apple higher is the larger adoption of remote jobs spurred by the coronavirus pandemic, Munster said.
“It’s generally considered an iPhone work, a 5G work. That’s good. This will affect the numbers in a positive way, but I think this acceleration of the digital transformation is powerful,” Munster said. “People working from anywhere will stay armed for the next 12 to 24 months, buying more Macs, iPads and services.”
Munster also reiterated its belief that Apple’s multiple could support a new expansion as investors reconsider the company, which in recent years has driven higher revenue generation from services to increase its hardware sales.
For its part, Munster said it believes Apple could leverage its hardware business in a service, such as buying a Mac with a subscription. “We think it will come, and that more talk about cars is a great opportunity for Apple’s multiples,” Munster said, alluding to reports that Apple could make an electric car in a few years.
More generally, he said he believes Apple will continue its strong stock performance in 2021, especially compared to its so-called FAANG brothers. In addition to Apple, the technology group also includes Amazon, Facebook, Google Alphabet and Netflix.
“We believe there will be a new FAANG split,” Munster said, with Facebook and Netflix lagging behind Apple and Amazon. “I think by 2021, the performance will come again from Apple. It may seem deaf to a company running FAANG for three years in a row, but I think it will actually happen. I think this has a $ 200 track. [per share]. “