Apple (NASDAQ: AAPL) recently became the world’s most valuable company again with a market cap of $3.57 billion. Its stock rallied more than 60% over the past three years, even as iPhone sales cooled off amid tougher macro and competitive headwinds.
From fiscal 2023 (ended last September) to fiscal 2026, analysts expect Apple’s revenue to grow at a compound annual growth rate (CAGR) of 5% as its earnings per share (EPS) rises at a CAGR of 10%. That growth will likely be driven by a cyclical recovery in iPhone sales, an expansion into higher-growth markets like India, and the evolution of Apple’s subscription ecosystem that hosts over a billion subscribers. Apple will also likely repurchase tens of billions of dollars in shares every year to boost its EPS.
Image source: Apple.
Those growth rates make Apple a stable long-term investment, but they’re a bit weak for a stock that trades at 35 times forward earnings and 9 times this year’s sales. Therefore, Apple’s valuations might have been inflated by the recent hype regarding its generative AI plans for its first-party apps. Assuming Apple meets Wall Street’s estimates and still trades at the same price-to-sales ratio by fiscal 2026, its market cap could grow about 12% to $4.01 billion by the final year.
That market cap would still make Apple one of the world’s most valuable companies, but I believe three of its trillion-dollar peers — Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) — could eclipse its valuation over the next three years.
The key differences between these tech titans
Apple, Nvidia, Microsoft, and Alphabet operate different business models. Apple generates more than half of its revenue from the iPhone, but it relies on its services business to drive most of its growth. Nvidia generates most of its revenue by selling high-end data centers for processing AI tasks.
Microsoft generates over half of its revenue from its cloud businesses, which include its Azure cloud infrastructure platform, Office 365 productivity services, and Dynamics customer relationship…
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