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Apple Could Reach $2 Trillion Valuation by 2022: Analyst

Pent-up demand for Apple products, combined with a strong services business, may drive Apple shares higher next year.
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Apple is on pace to reach a $2 trillion market cap by the end of next year, according to one of Wall Street's biggest Apple bulls. 

A surge in demand over the next few quarters, combined with new product and software releases, could drive Apple's share value significantly higher as COVID-related headwinds dissipate, wrote Wedbush analyst Dan Ives in a note on Thursday. 

Apple  (AAPL)  shares rose 2.8% on Friday, reaching an all-time high of $331 per share and placing its market cap at around $1.44 trillion. 

"Services and iPhone 12 [are] the '1-2 punch' further catalyzing shares higher," Ives wrote. "Looking out further, we believe by the end of 2021, Apple has potential to be the first $2 trillion valuation [stock] given the 5G tailwinds and services momentum potential over the coming years."

He added that investors are beginning to appreciate the value of Apple's growing services business, which Ives assigns a valuation of between $500 billion to $650 billion. Wedbush maintains a 12-month price target of $375 on Apple shares. 

Earlier this week, Morgan Stanley analyst Katy Huberty bumped the bank's price target for Apple shares to $340 a share from $326, writing that Apple will benefit from the robust "app economy" tied to the current stay-at-home environment. 

“High levels of engagement have sustained as the 'new normal' (at least in the near-to-medium term)… includes more time spent indoors, which should remain a tailwind to app store performance, and which is now incorporated in our raised services estimates,” Huberty wrote. 

Apple shares are up 10% this year despite a hit to both supply and demand for iPhones, Apple's main cash cow, generated by the COVID-19 pandemic. Many Apple stores remain closed owing to the ongoing public health emergency, although around half of its stores worldwide had reopened -- at least in minimal capacity -- as of last week. 

Apple cautioned in its March quarter earnings report that iPhone and wearables sales are likely to worsen in the current quarter, but that engagement with its services products will remain high. 

Apple revoked its forward-looking guidance for the June quarter and full fiscal year. 

The company is also planning its first virtual WWDC, slated to begin June 22, where it is expected to preview iOS14 and other software enhancements. 

Apple could also "[drop] some breadcrumbs around new products/R&D initiatives on the VR and wearables/AirPods front," during the virtual conference, Ives wrote. 

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