After seeming to defy the general COVID-19 downturn, tech stocks have taken a dip as of late. Loup Ventures’ tech analyst Gene Munster thinks there is going to be a split in future fortunes — with some soaring back up to previous highs and others, well, not.
Apple, he believes, is going to be a big winner. And from my calculations he thinks it could be just a couple of years from another major financial milestone.
“There’s going to be a fracturing of the performance within FAANG,” Munster told CNBC’s “Trading Nation” this week. “Think of that group of haves being Apple, Amazon and Google, and the have nots being Netflix and Facebook.”
Munster is the most bullish on the future of Apple. “It’s very simple,” he said. “Cash is king, and that will ultimately will be driven even higher with wearables.”
The road to $3 trillion?
“[Apple] should earn close to $6 [a share] in earnings in just a couple of years,” Munster predicted. “Put a 35x multiple on that, and you have a $200 stock.”
At time of writing, AAPL is trading at $107.12. This gives it a market cap of $1.832 trillion. If Munster is right, and a $200 stock price is on the way in the next couple of years that would suggest Apple could pass $3 trillion sometime in 2022. (Depending on Apple’s share buybacks, that is!)
Since it jumped from $1 trillion in 2018 to $2 trillion in 2020, that trajectory would kind of make sense (or even be slightly pessimistic for a company which doubled in market cap in just a couple of years). Even if it does seem unimaginably giant when viewed today. This year alone, Apple has climbed 52%, but is down 19% from its all time high.
Munster is also excited about Amazon’s prospects, as well as those of Google. But Netflix and Facebook, he believes, could falter. That’s because they are doing little he sees as innovative right now. “The losers are simply going to be doing the same things in the one [to] two years as they did in the last,” Munster said. “This won’t satisfy investors’ need for bigger and new addressable markets, and we think the multiples on those stories will start to be weighted down in the months and quarters ahead.”