Is the Apple Hype Out Of Control?

Tuesday, 3 Apr 2012 | 2:21 PM ET

If you're among the throngs of Apple bulls, you have two more reasons to celebrate.

Topeka analyst Brian White issued the Street’s first $1000 price target on Apple earlier this week.

And perennial Apple bull Gene Munster raised his price target from $718 to $910, with the caveat that he too thinks Apple could trade $1,000 or more in 2014.

White, Munster and other Apple advocates with lofty price targets believe that the iPhone and iPadboth still have tremendous growth potential, especially among the coveted business market.

The scenario sounds idyllic; bulls say not only is Apple going to expand around the world, but it's going to win market share away from the competition. That almost sounds too good to be true. According to BGC analyst and Colin Gillis, it is.

“I see all my peers just jacking their price target,” he says on Fast Money’s Halftime Report. In fact he thinks the Apple hype is out of control. And because of the hype, he thinks the Street is missing a few serious headwinds.

Apple Hype Out of Control?
The Fast Money Halftime traders break down the day's major tech headlines, including Barclays placing a downgrade on Netflix and a valuation of $1 trillion for Apple by 2014, with Colin Gillis, BGC Financial analyst.

1. History

The first problem for Apple is history. “5 other companies have cracked the 500 billion market cap; Exxon, GE, Microsoft, Cisco and Intel,” reminds Gillis. ”Their market caps didn’t keep growing – there is no precedent for any US company to grow to $1 trillion in market cap.”

2. Rotation

Gillis is also concerned by a trend he sees as moving into its late stages. “The developed market is halfway through rotation into smartphones,” he says. In other words, the trade-up phenomenon underway from ‘old style’ cell phones to smartphones will start to run out of gas.

3. Ripple

But history and rotation aside, Gillis sees something more serious for stock investors. He believes expectations will become harder and harder to beat. And when Apple does disappoint, the ripple will be severe.

“Apple is the most widely owned stock among hedge funds – if sales results for iPhones and iPads start to disappoint you’re going to see hedge funds liquidate,” he says.

In case you’re wondering Gillis has a $500 price target on Apple.

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