Gene Munster, who called Apple’s run to $2 trillion, says a path to $3 trillion is in sight

Tech investor Gene Munster informed CNBC on Thursday he sees a affordable path for Apple to attain a $3 trillion market capitalization in the longer term.

The iPhone maker turned the primary publicly traded U.S. firm to attain a $2 trillion market cap in August — a milestone Munster foresaw in January, when he made the case for the inventory to commerce 50% increased. As of Thursday, with its inventory round $133 per share, Apple was valued at virtually $2.3 trillion.

Munster, who coated Apple as a longtime analyst at funding financial institution Piper Jaffray, mentioned on “Squawk Box” that he believes the California-based firm can realistically attain $200 per share. That would put its market cap over $3 trillion.

“It needs to be anchored in earnings. That’s the powerful piece about the Apple story,” mentioned Munster, who co-founded enterprise capital agency Loup Ventures. He mentioned his prediction is based mostly on Apple buying and selling at a price-to-earnings ratio, or a number of, of 35 for 2022 earnings estimates.

“It’s a year out there but I’m fast-forwarding the conversation to the middle and back half of next year, and we’ll be talking about 2022 at that point. If the market can sustain these 35 multiples — you know, we’re not talking about an Amazon-like multiple here — I think that that path is there,” Munster mentioned.

Apple’s present price-to-earnings ratio is virtually 41, after the inventory soared about 81% this yr. Amazon, which has seen its inventory rise about 76% this yr, trades at roughly a 95 a number of.

One catalyst that would assist propel Apple increased is the bigger adoption of distant work spurred on by the coronavirus pandemic, Munster mentioned.

“This is generally thought of as a play on iPhone, a 5G play. That’s good. That will impact the numbers in a positive way, but this acceleration of digital transformation, I think it’s powerful,” Munster mentioned. “People working from anywhere are going to be arming up in the next 12 to 24 months, buying more Macs, iPads, services.”

Munster additionally repeated his perception that Apple’s a number of might face up to additional growth as traders rethink the corporate, which has in current years pushed to generate extra revenues from providers to increase its gross sales of {hardware}.

For his half, Munster mentioned he thinks Apple might leverage its {hardware} enterprise into a service, equivalent to shopping for a Mac on a subscription. “We believe that that’s coming, and more talk about autos is a big opportunity for Apple’s multiple,” Munster mentioned, alluding to stories about Apple potentially making an electrical automobile in a few years.

More usually, he mentioned he believes Apple will proceed its sturdy inventory efficiency in 2021, particularly in contrast with its so-called FAANG brethren. In addition to Apple, the group of tech corporations additionally contains Amazon, Facebook, Google-parent Alphabet and Netflix.

“We think that there will be a further fracturing of FAANG,” Munster mentioned, with Facebook and Netflix lagging Apple and Amazon. “I think for 2021, the performance is going to come again from Apple. It may seem tone deaf for a company to lead FAANG for three straight years, but I think that in fact will happen. I think this has a track to $200 [per share].”

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