Apple hits new high and market cap approaches entire French stock market. We don't think it's done

Published Fri, Dec 15 20233:55 PM EST

Apple shares hit new records this week — nearly surpassing France's stock market value. Still, we see reason for the Big Tech name to climb even higher into 2024. The iPhone maker closed at an all-time high Thursday at just over $198 per share and approached a $3.1 trillion market cap. (Shares took a modest breather Friday). To put that into context, Apple is almost as big as Europe's largest stock market. The CAC All Share index, measuring the largest 373 stocks in France, had a market cap of $3.38 trillion — as of Thursday's close. But, despite Apple's stunning run with over 50% gains year-to-date, we see four tailwinds for our "own it, don't trade it" stock going into 2024. Services: We're encouraged by management's comments around Services momentum. We think this continues to be the mega-cap name's biggest long-term driver for growth. Apple's Services business, which provides the kind of high-margin recurring revenue stream Wall Street loves , surged in the latest quarter to a record high of $23.31 in revenue, up 16% year-over-year. India: Apple's expansion into emerging markets like India will be a solid way to diversify its supply chain amid uncertain relations between the U.S. and China. CEO Tim Cook previously told CNBC that India was a "huge opportunity" for the world's most valuable publicly traded company. The move can also help Apple's iPhone share in the country's untapped economic potential . As we've said many times in the past, Apple's product quality, closed ecosystem, and pricing continue to attract and keep its a loyal customer base. We expect it to do the same in India. Artificial Intelligence: We see Apple's AI efforts as a great way to add value to its devices and overall customer experience in the long run. According to Bloomberg , the firm is on track to spend $1 billion each year on building out its generative AI products. Apple isn't launching a chatbot like ChatGPT but rather is said to be using AI to improve offerings such as Siri, Messages, and Apple Music. Mixed reality: Apple's highly-anticipated Vision Pro headset is set to be released in early 2024, which Jim Cramer touted as a "wondrous device" when he tested it in July. "I can't imagine taking it off once it is on," he added at the time — citing a great user experience. The launch of the pricey mixed reality headset (starting at $3,499) won't impact financials in the near term. But, we will watch what developers are saying about it and how the new ecosystem around it emerges. We can the Vison Pro becoming a material revenue driver over time as the form factor improves. AAPL YTD mountain Apple (AAPL) shares year-to-date performance Overall, Wall Street is also upbeat on Apple into next year. Citigroup wrote in a recent note that the "bears on the stock are missing the structural gross margin expansion story" for Apple, reiterating bullish acceleration in Services sales. "We expect the above trends to continue next year, and view AI, Phones and Vision Pro adoption as potential upside catalysts." Analysts at the firm have a $230 price target on the stock, roughly 16% upside from Friday's trading levels. (Our Club price target is $205.) However, we don't want to ignore some of the possible headwinds, either. Competition in China , Apple's second-largest market, has become increasingly stiff as domestic smartphone players like Huawei and smaller domestic brands grab market share there. A cautious consumer could also be an issue as the U.S. — Apple's largest market — continues to face concerns over a recession. (We still believe the Federal Reserve can manage a soft landing.) Bottom line While both China competition and softer U.S. spending could impact Apple sales, we believe that any weakness would be offset by Services growth and new product launches. Capital return programs such as massive stock buybacks are also a plus for shareholders. Jim has maintained his conviction despite the typical hate-Apple-trade headlines . Back in September, the tech behemoth posted mixed quarterly results, which spurred a brief — yet unwarranted — sell-off. While some Wall Street analysts speculated about whether Apple's better days were behind it, Jim said that investing in the firm's stock is " not about quarters " — but instead, about the longtime track record of share performance. (Jim Cramer's Charitable Trust is long AAPL . See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Tim Cook, chief executive officer of Apple Inc., holds an iPhone 15 Pro Max during an event at Apple Park campus in Cupertino, California, US, on Tuesday, Sept. 12, 2023.

David Paul Morris | Bloomberg | Getty Images

Apple shares hit new records this week — nearly surpassing France's stock market value. Still, we see reason for the Big Tech name to climb even higher into 2024.