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Fred Dunkley

Fred Dunkley

Writer, Safehaven.com

Fred Dunkley is a tech analyst, writer, and seasoned investor. Fred has years of experience covering global markets and geopolitics. 

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Apple Beating Google And Amazon In Trillion-Dollar Race

Tech

Apple, Alphabet and Amazon are facing off to win the title of a long-running American competition: The first trillion-dollar company in history.

Which will hit the trillion-dollar valuation first depends on who you ask.

Apple’s market cap is around $900 billion right now, and it needs a $100-billion boost to get it across the trillion-dollar finish line.

To do that, it’s relying on its latest, greatest smartphone, the iPhone X, plus three new smartphones slated for release this fall—tentatively.

Will it give Apple another $100 billion? Again, the jury is still out on that.

Last year, the iPhone X missed sales expectations, so Apple is hoping that its fall roll-out of three new phones will more than make up for that.

One is the largest iPhone yet with a screen that’s almost 6.5 inches and a new large handset. The second, the D32, is an upgraded iPhone X, and the third is a low-cost model that is supposed to be better than the iPhone 5C because it promises some iPhone X features. 

The clincher here is that the new iPhone X will have a higher price tag, starting at $999. That means that bringing in record profits won’t require breaking the sales record.

In racing terms, even with modest sales, revenue growth looks on track to be 10 percent, which brings it close to the finish line in the fall.

Warren Buffett, for one, is a diehard believer in Apple, basically calling it THE stock worth owning right now. Buffett’s Berkshire Hathaway nearly quadrupled its stake in Apple when it picked up more than 40 million shares in February.

But the ‘A List’ is an intimidating one that also includes Amazon and Alphabet.

Alphabet, the parent company of Google (GOOGL), is the second-runner up so far, with a market cap of $753 billion as of market close on Monday, 5 March.

It’s some $150 billion behind Apple, but narrowing the gap, with stock up almost 27 percent over the past year to date, and revenues coming in 24 percent higher for Q42017. Most of its revenues have come from search advertising and YouTube; and taking things to the trillion-dollar mark will mean breaking out beyond this. Related: How Italy’s Election Could Increase Demand For Gold

It will be big gains in cloud computing and artificial intelligence that push Alphabet over the edge; but for now, the path isn’t as clearly visible as it is for the third runner-up—Amazon.

Amazon is on a tear so far this year, and a trillion-dollar valuation is in clearer view, though it’s behind Apple and needs a 46-percent gain to cross the finish line. As of market close on Monday, Amazon had a market cap of $726 billion.

Next year isn’t out of the question. Amazon’s revenue growth rate is over 25 percent, and there’s so much in this pipeline that some are calling it the ‘new monopoly’.

With Q4 results better than expected and global sales up 38 percent, there seems to be no sector safe from this bulldozing giant. It recently opened its first no-checkout store, Amazon Go, which promises to even more severely disrupt the retail sector, and now it’s breaking into healthcare with Berkshire Hathaway and JPMorgan Chase.

Last year, it spent over $13 billion on Whole Foods Market, and it just spent another $1 billion on a smart door bell company, Ring, in a race against Google and Apple to control the smart home market.

Even banking isn’t safe from the wide net Amazon has cast. Now it’s in talks to create a checking account product that would appeal to a younger audience.

So while Apple is closest to the finish line, Amazon is closing in on all fronts, and Alphabet is not giving up the fight, the only thing that could derail their global trillion-dollar-first status is the Saudi Aramco IPO, which is expected to be valued between $1.5 trillion and $2 trillion, and may go public sometime this year.

Regardless, one of these giants will emerge as the first U.S. company to hit the trillion-dollar mark, even if it’s not a global title.

By Fred Dunkley for Safehaven.com

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