[NewsPoster]

Although it is well-known that Apple is the world's most profitable and most highly-valued publicly-traded company, most of the public and even many investors are unaware that its market valuation of nearly $750 billion now puts it 75 percent of the way to world record that has been a dream of investors for decades: the world's first company valued at $1 trillion. A Virginia-based investment bank now believes Apple will reach that goal by 2016.

The bank has set a year-end stock price target of $185 per share, which would be sufficient to increase its valuation to such lofty levels. While not the first to predict it, FBR is unique in predicting a relatively short time to accomplishing the $1 trillion market cap, saying that the key to Apple's continued growth are rising mobile sales in China, increasing profit from services, and new Apple devices in new product categories such as the Apple Watch.

Average industry targets for AAPL hover around $140 per share, though others such as Cantor Fitzgerald's Brian White have posted a similar price target and valuation prediction. Activist investor Carl Icahn has long said that AAPL should be valued over $200 per share. Talk of Apple eventually reaching a $1 trillion market cap has been in the air since 2007, but the company gets ever-closer to that arena with each passing quarter. Even the much more conservative consensus estimates of around $815 billion in market cap by the end of the year suggests that Apple is at most a few years away from the milestone.

Daniel Ives, an analyst at FBR, believes that Apple will expand both its "service" category offerings as well as the profits deriving from them. He believes that -- in addition to steady money-makers such as the App Stores -- that new additions such as Apple Pay, the rumored "TV package" of independent content the company is trying to offer, or a revamped Beats Music subscription service said to be launching in June could increase the revenue the services division brings in from its current 12 percent of total earnings to around a third of Apple's income by 2017.

Ive believes that while mobile hardware is becoming "increasingly commoditized," Apple's closed software eco-system is an advantage that rivals cannot match. The iOS App Store, for example, creates lock-in to the platform which leads to buyers investigating Apple's other products, and is much more secure and more diverse than any other service from Google or other companies. These same advantages could benefit the Apple-IBM partnership that serves enterprise clients, offering cloud and other business services alongside the boost to iPhone and iPad sales the company would see from greater corporate penetration.

AAPL year to date performance

Increased sales of Apple hardware, including Macs and Apple Watches in the US and European markets alongside rising iPhone and iPad growth in China and other emerging markets will keep the hardware side highly profitable and healthy as well, FBR predicts. Currently, AAPL is flirting with another all-time high, closing on Wednesday at $128.62 per share -- just over $4 shy of its record closing high of $133 per share.

Presuming another explosive holiday season in 2015 like the one the company had last year, revenue could again end up in double-digit growth territory for the company. Early reports suggest that the company's latest products -- the Apple Watch and revamped MacBook -- have both sold far in excess of initial predictions, and are on track to beat analysts' previous estimates, while the Watch is already poised to be the primary gift target for the upcoming holiday season, and initiatives like Apple Pay should see wide expansion over the course of this year.

[iphonerulez]

Apple shareholders will be lucky for Apple to ever reach $150. It's a great company with a lousy valuation. Wall Street doesn't have any confidence in Tim Cook. Most of Apple's cash reserve is trapped overseas and can't be used for anything meaningful. Everyone thinks AppleWatch will be a huge failure. Then there's those constantly declining iPad sales numbers which annoy investors. Apple is moving in a constant headwind and none of those things say trillion dollar market cap. Wall Street has always taken a negative attitude against Apple and it's unlikely to ever change. The anti-Apple news media won't let it.

[Charles Martin]

I agree with you that Apple is undervalued, but I think you misread Wall Street (or you wrote this post last year but just published it now). Tim has won over Wall Street with iPhones sales and Apple Pay, the Apple Watch is already a massive hit, the iPad will probably get a fix but is not Wall Street's focus compared to iPhones, China is growing nicely, and the stock is already at nearly $130 today.

I agree that there's always a headwind because Wall Street just doesn't "get" Apple, but with numbers like these it doesn't have to. The fact of the matter is that nobody's been able to put up a meaningful competitor in either the phone or tablet space that does that kind of business, and Apple Pay and the Apple Watch both support Apple's biggest moneymaker, the iPhone. A stock price of $185 this year is very ambitious, and I'm dubious on it, but they'll get there soon enough, if not perhaps this year.

[climacs]

Charles has it right, iphonerulez has it wrong, you're about 12 months behind buddy. AAPL is building a tailwind. It IS infuriating that AMZN trades for something like 800+ times P/E while AAPL hangs around 17... especially when Apple actually makes and sells things - and a lot of them - that you can pick up and hold.

[jdonahoe]

As an Apple stockholder I want Apple to increase its share price. The problem is Wall Street takes any perceived potential problem and trashes Apple's stock. With the latest news of Samsung's new Galaxy S6 being popular enough to ramp up production is sure to get Wall Street to start shorting Apple again.

Of course you might say that twice nothing is still nothing when referring to Samsung's increased production.

[Flying Meat]

Galaxy S6? Is that the bendie one?