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Apple could hit $3 trillion market cap - Analyst

“The [iPhone] supercycle — it’s not just hype, it’s reality. And it’s starting to play out,” Wedbush’s Dan Ives told Yahoo Finance. “I believe six to nine months from now we’re looking at a $3 trillion market cap for Apple.”

Video Transcript

- I want to bring in Dan Ives right now from Wedbush, because we got to break down what happened with Apple's earnings, and of course Tesla with the GM news of going all-electric by 2035. But Dan, it's the headline du jour, I got to ask you. This business with Robinhood and Reddit and GameStop, and going after the firms that short. How do you make heads or tails of this? Are we at an inflection of power shift here?



- Dan, I think you might be muted. I do it all the time, don't worry.

DAN IVES: You're starting to see a market force that previously wasn't a factor. And now it's starting more and more to play in, as the individual investor now is no longer at the kid's table. So you're starting to see maybe a bit of a share shift, but fundamentally it's still a contained issue. I think this is one where it doesn't really change our view overall on stocks, in terms of-- especially when I look at a risk-on trade. But it's definitely a dynamic that's going to play into the market going forward. And I think we need to see if this is a contained issue or it has more of a brush-fire type impact.

- Dan, we got to talk about Apple. We had their earnings out after the bell yesterday. You were out with a note this morning calling it a jaw-dropper December quarter. Yet we're seeing shares under a bit of pressure today, off just around 2%. Why do you think we're seeing this reaction in the stock?

DAN IVES: Look, I mean, in my opinion, it's probably the best Apple quarter that I've seen in six to seven years. I mean, this was a Cinderella story type of quarter, in terms of a $5 billion iPhone beat. And this really just shows the supercycle, it's not just hype, it's reality. And it's starting to play out. And I believe six to nine months from now, we're looking at a $3 trillion market cap for Apple.

So as I write here, when I look at a stock being down a bit, I view it as a buying opportunity. And it continues right now to be a five-year supercycle with services that's part of the re-rating in Apple. I think that alone is worth $1.2 trillion.

- I used to be an Apple lover. I think that the $3 trillion call, I mean, people do love these Apple products. But is there any concern that maybe quality is falling at Apple? I mean, we saw them release Big Sur far too early, and there were a lot of hiccups in getting that out.

DAN IVES: Yeah, I think, ultimately, if you look from a hardware perspective at their releases, from iPhone 12 to what we've seen on AirPods, to across Mac. and of course, with their own chip, in terms of them-- and that's important, in terms of what we're seeing with their own silicon. It's really been a renaissance of growth from a product perspective within Cupertino. They're always going to have some dings here and there, you talked about it with Big Sur.

But ultimately, whatever leaves the four walls within Cupertino has been met with massive success, especially over the last year or two. And I think that's why they continue to have that gold standard, in terms of what we see for Apple. And you're seeing on iPhone 12, a lot of skepticism in terms of the supercycle. Many thinking their best growth is in the rear-view mirror. What you saw last night is Mahomes type of growth.

- Hey, Dan, I also want to ask you about Tesla, because that stock also off just around 2% today. Bears are pointing to the miss that they reported on earnings, about that they reported lower margins. Why doesn't this worry you at all?

DAN IVES: It's a golden age for EVs. And I know we've talked about it before, but it's 3% penetration in terms of EVs. Globally, going to 10% next three to four years. China firing on all cylinders. And I think you're saying, not just for Tesla, but the likes of Nio, Xpeng, and others. And then when you look at a Biden administration coming in, I think a doubling down on tax credit restoration to Tesla and GM. This is really just the start of what I believe could be a million vehicles plus delivered for Tesla in 2022. They're going to be conservative out of the gate for deliveries, but I think it's a sandbag special in terms of guidance.

- What about this effort by the federal government to switch over to the fleet? All new purchases being electric vehicles. I mean, are we going to see-- remember how it was K-cars in the 1980s? Are we going to see Nissan Leafs? 'Cause I can't imagine government folk driving Teslas.

DAN IVES: Well, no, I think when you look at this government initiative, it's really the broader green initiative that we're seeing. Of course, GM just drove into the deep end of the pool, going full EVs by 2035. And I think what you're really going to see is a massive shift within the US, not just on the government side, but within consumer demand.

But a lot of it's driven from a Biden and a blue Senate, green across the board. And that disproportionately benefits the likes of Tesla, GM. But it's also why you have that company in Cupertino, Apple. They're not going to look at EVs from the outside looking in. I believe in the next six to nine months, they announce an EV partnership with the likes of Tesla, VW, Hyundai, or potentially one of the big three.

- Hey, Dan. When we got the info out from Biden, saying that he wants to move the fleet to EVs, this whole initiative that he launched, he didn't give a timeline. Does that matter?

DAN IVES: Well, I think they don't want to put themselves sort of back against the wall, in terms of the timeframe. We've talked about 2030. In terms of supercharger network, potentially building that 500K. But I think they still need to double click and figure out, to make sure they do a time horizon that they don't miss. There'll be a lot of speculation on that. And I think over the next, call it three to six months, there's going to be more concrete plan.

But I think it's going to be multifaceted. The restoration of tax credits on Tesla and GM, that's significant, especially for Tesla in terms of US demand. More tax incentives in terms of factory build-outs and then the supercharger build-outs. And I believe a year from now, we're sitting here, we have more foreign EV manufacturers coming into this country. And I think that's going to be a big part of job growth in terms of the EV environment.

- Dan, before I let you go, I got to ask you and hold you to something you said earlier in the discussion. Are you a Kansas City fan?

DAN IVES: Look, I mean, ultimately, I like Kansas City. But Mahomes, in my opinion, it's hard to bet against him, just like it's hard to bet against Tesla and Apple. And you know, I still think KC by a touchdown.

- All right. Dan Ives, we got to get you back on the 8th. But first, I'm going to say thank you. It's always a pleasure to have you here, buddy. All the best to you. Take care.

DAN IVES: Thank you. You too.

- Dan Ives is with Wedbush Securities.