Investors have started seeing Apple's business less like other hardware makers and more like a software company, as indicated by Apple's quickly rising PE ratio, which is now over 33.
Before Apple was able to get investors to look at it like a software company, its low PE ratio compared to big tech peers like Microsoft was an object of fascination for techies and investors. Investors saw its hardware business as "hits-driven" and worried that future iPhones and iPads might not sell as well as they had in the past. Venture capitalist Marc Andreessen remarked in 2015 that Apple traded like a "steel mill going out of business.
"Steve Jobs famously would focus on, 'our goal is to to determine the few things that we should do and do them as well as possible.' And then because of the maturation of the smartphone market, I think that forced Tim Cook's hand. He's basically said okay, what is Apple good at? Now let's apply that to a lot of different things," said Forte.
Increasingly, the App Store, which is one of Apple's most important and biggest services, is drawing criticism from developers who say its 30% cut on sales of digital goods is too rich. It's also feeling pressure from lawmakers and regulators — Cook had to answer several questions about the App Store's business practices at a congressional hearing in July.
There are other factors behind Apple's rise. Tech stocks in general are doing well in the pandemic as investors search for safe havens that offer the possibility for growth. Apple is also a big purchaser of its own stock, authorizing a $50 billion increase to the company's share repurchase program in 2020, following top-offs of $75 billion in 2019 and $100 billion in 2018.
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