Apple's Market Value Surges to $4.54 Trillion, Earnings Growth Key to Future Success

Apple's market value has skyrocketed to $4.54 trillion, up 51% over the past year and adding about $1.5 trillion in value. This marks a significant gain for investors who have held onto their shares for the decade. In August 2016, Apple's stock split-adjusted price was around $27 per share, but today it sits at approximately $311.

This translates to an 11.5-fold increase, turning a $10,000 investment into about $126,000. However, the dividend's role in this growth is relatively small, with the yield shrinking from about 2% to 0.35%. The majority of the gain came from earnings growth and a higher multiple on those earnings.

The company's high-margin services business has contributed significantly to its success, along with its gross margin reaching 50.1% in the most recent quarter. Apple's buyback program also played a crucial role, reducing the share count by about a third over the decade and making each remaining share claim a larger slice of profits.

The market multiple has nearly tripled since August 2016, from around 13 times earnings to approximately 36 times. This raises questions about whether this trend can continue, as a tripling of the multiple would mean Apple's stock price would exceed 100 times its earnings.