While Apple has a multibillion dollar war chest to expand the company, and there are concerns about the life of its current product portfolio, the shares are now flirting with an all-time high. Now over $140 they have fallen back a couple of dollars from their all-time high but many analysts expect a renewed push in the short term. So, why are Apple shares flirting with a new high?
New hardware
If there is one company which is an expert at managing expectations it has to be Apple. We have had months of no news from the company, speculation in the press and now it appears that next week could see the launch of the new iPad. Many people believe this is the main reason the share price has pushed to an all-time high but there does seem to be more behind-the-scenes – although history does show that new product launches coincide with a strong share price.
New iPhone expected
It looks as though the new iPad could be a warmup act for the new iPhone later in 2017. The company is making significant changes to the new iPhone with so-called “augmented reality” set to be a key element. There is no doubt that Apple has a tendency to move with the times, lead markets and break into new areas and it does looks as though the new iPhone will be far better than current expectations.
In the meantime sales of the iPhone 7 were described as “dynamite” in the final last three months of 2017 by CEO Tim Cook. This is high praise indeed especially when you bear in mind that the previous nine months were disappointing. There is growing speculation that the company has turned yet another corner and is moving towards another growth phase.
Warren Buffett believes in Apple
Despite the fact that Warren Buffett is a renowned technophobe he has built up a significant stake in Apple. Prior to the end of 2016 his Berkshire Hathaway vehicle was holding 57 million shares. This in itself is a significant stake but the company has since bought a further 120 million Apple shares in 2017. We can only assume that Warren Buffett has done his homework and believes that the company is on the crest of another growth wave.
It is no coincidence that some high-profile investors are now topping up their Apple holdings and the share price is within reaching distance of its all-time high. Whether the recent Snapchat IPO has helped investor sentiment is also another topic of discussion as there is a feeling that technology shares are coming back into favour.
The future
While the introduction of new iPads and new iPhones will make a significant difference to Apple in the short to medium term, there is still a need to widen the company’s operations in the longer term. There has been talk of electric vehicles, autonomous vehicles and many other areas of groundbreaking technology. Let’s face it, the company has a multibillion pound warchest and rather ironically the longer this remains un-invested the more detrimental to the share price. The worst thing the company could do would be to return this to shareholders in a special dividend as this would seem to admit defeat in the search for another leg to the business.