Apple's shares jumped in trading on Wednesday (May 1) on the back of a strong showing for its second quarter, setting the stage for another push above the $1 trillion market capitalization. It's a milestone Apple briefly hit in August, only to see its stock fall as demand in China slumped.
After the close of trading on Tuesday (April 30), Apple appeared to put those worries away, announcing second-quarter results that beat Wall Street's earnings and revenue expectations. With a stronger than expected forecast for the third quarter, Apple's shares gained in trading Wednesday (May 1). During inter-day trading, Apple's market cap was about $970 billion. Only Microsoft is ahead of that in the race to the more than $1 trillion market capitalization, reported Reuters.
Apple's iPhone business continued to suffer in the second quarter, with revenue down 17 percent year over year but in line with Wall Street's expectations. Services was a bright spot for Apple, with results surprising analysts and driving the stock higher. Services – home to such offerings as Apple Music, iCloud storage, AppleCare warranties and Apple Pay – saw a revenue increase of 16 percent, reaching $11.45 billion during the second quarter.
Apple's results for the second quarter prompted Wall Street to get bullish on the stock. According to Reuters, at least six investment banks raised their price target on the stock, with Jefferies among the most aggressive. That Wall Street firm raised its price target on Apple to $210 from $150 a share. Analysts pointed to Apple's outlook for the June quarter and negative sentiment around shares as reasons to like the stock.
While iPhone demand is still slumping, it is starting to improve in China thanks to price cuts, new device financing offers and improved trade relations between China and the U.S. “With a mature smartphone market, we believe Apple has locked up strong share of the premium tier market and will continue to dominate high-end smartphones sales and capture the vast majority of smartphone profits for the next several years,” said Canaccord Genuity analysts.