High-flying Apple stock has surged more than 19% so far this year, adding to its 131% rally between March and December 2020. Despite this, Apple stock trades at a price/earnings ratio of just 29x — far cheaper than Indian IT stocks. The bull run seen across global markets since the end March 2020 has helped technology stocks in the US gain significantly. Facebook has rallied 40% this year while Microsoft is up 38%. On average FAANGM stocks have gained 31% so far in 2021 with Google gaining the most at 66%.
Revenue growing strong
Apple is the largest technology company in the world going by its $2.5 trillion market capitalization. In the previous quarter, Apple reported revenue of $81.4 billion, up from $59.68 billion in the year-ago period. The company said its net income was recorded at $21.7 billion against $11.25 billion in the year ago period. The iPhone manufacturer received $39.57 billion from sales of its flagship iPhone, beating estimates of $34 billion sales revenue amid the pandemic.
Also Read: Warren Buffett made $5 billion from these 3 shares this week; Apple stock among gainers
Apple’s P/E multiples are, however, more expensive than peers such as Google, which trades at 28.8x and Facebook that trades at 27x. Meanwhile other technology giants such as Microsoft and Amazon trade at higher multiples than Apple.
Analysts at Simply Wall Street believe that the stock is expensive when compared to the sector and the market as a whole. However, they added that the investor optimism for Apple may be justified saying that the company could benefit from the global chip shortage. Apple is also a major part of ace investor Warren Buffett’s portfolio, who earlier this year acknowledged that selling some of his Apple stocks was a mistake. Warren Buffett’s Berkshire Hathaway owned 907 million shares of Apple at the end of December last year. The value of Apple shares in Berkshire Hathaway’s portfolio stands around $139.44 billion.
Indian IT stocks’ performance
Domestic technology stocks such as Infosys, TCS, Infosys, HCL, Mindtree, among others have also rallied significantly. TCS, the largest domestic IT company by market cap, has rallied 30% in 2021 to date, while Infosys is up 36%. Meanwhile the midcap IT stocks have rallied even higher with Mindtree and Happiest Minds skyrocketing more than doubling since January. TCS is currently trading at a P/E ratio of 40x while Mindtree is at 50x, Infosys trades at 38.6x, and HCL Technologies at 35.19x. Indian IT companies and US technology companies such as Apple differ on business models and services.