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Pro Analysis

Breakingviews: Buffett’s $1 trillion target for Apple is in sight


Warren Buffett, chief executive officer of Berkshire Hathaway Inc.
Jeff Kowalsky | Bloomberg | Getty Images
Warren Buffett, chief executive officer of Berkshire Hathaway Inc.

Warren Buffett's $1 trillion target for Apple is in sight. The Berkshire Hathaway boss has bought more stock in the iPhone maker – whose market capitalization at Friday's closing price was $717 billion – and reckons it might become the first company with a 13-digit valuation. Breakingviews first suggested that back in 2011. Growth has slowed, but the company still looks undervalued.

The tech giant led by Tim Cook now trades at about 15 times estimated earnings for its financial year to September 2017. The S&P 500 Index trades at about 19 times projected earnings for the same period. Moreover, Apple has nearly $250 billion of cash and equivalents, such a huge pot that most of it is invested in long-term securities – a category excluded from standard cash and net debt calculations.