Apple (NASDAQ: AAPL) is one of the most influential companies in history.
The iPhone heralded the era of the mobile internet, and now, the Vision Pro may kick off the next major computing platform. Most of the credit for the company's success is usually given to co-founder and longtime CEO Steve Jobs. He led Apple through its most inventive period when it released the iPod, iPhone, and iPad in less than a decade, setting the stock on an incredible growth path that's lasted to this day.
Current CEO Tim Cook took the helm in Aug. 2011, shortly before Jobs' death. Cook had previously served as Chief Operating Officer, running the company's sales operation and supply chain. While some were skeptical that Cook could fill Jobs' shoes, he's skillfully led Apple and its stock to new heights. Here's how the company has fared during his tenure.
The Tim Cook era
In 2011, the tech industry was much smaller than it is today. Smartphones were still relatively new, and the mobile economy was just developing.
True to expectations, Apple's pace of innovation has slowed under Cook. Prior to the release of the Vision Pro earlier this month, the biggest products launched under his tenure have been accessories like the Apple Watch and AirPods.
Cook's biggest accomplishments have likely been the growth of the company's installed base of devices, which reached 2.2 billion in its most recent quarter, and the growth of the services business. Services generate significantly higher margins than Apple's devices, and annual services revenue exploded from $12.9 billion in fiscal 2012 to $85.2 billion in fiscal 2023. Revenue from this segment is largely driven by the App Store, or the 30% commission Apple takes on in-app payments, as well as offerings like Apple Pay and Apple Care insurance.
These achievements have largely been incremental: Improving each iteration of the iPhone enough to keep customers coming back for an upgrade, helping to grow the services business, and selling complementary devices like Apple Watches and Airpods.
However, 2024 has set the stage for arguably the biggest risk the company has taken under Cook: the release of the Vision Pro. Though reviews have been mixed, most industry observers believe that if any company can crack the headset market, it's Apple.
How Apple stock has performued under Cook
As most investors know, Apple has been a big winner in the Cook era.
As you can see, the stock has outperformed the S&P 500 by a wide margin since Cook took over in Aug. 2011 -- up 1,270% (or 1,530% on a total return basis). That means an investor who bought $10,000 of Apple stock at the start of Cook's tenure would have $163,000 today after enjoying a compound annual return of 25%. An equal investment in the S&P 500 would be worth just $52,100 today.
Can Apple keep winning?
Apple held the title of the world's most valuable company for most of the past several years, but it recently lost the crown to longtime rival Microsoft. Nonetheless, Apple is still in good shape to deliver solid profit growth as it grows services revenue, repurchases stock, and refreshes its device lineup.
The company dominates the consumer tech industry, and it's grown its share of the smartphone market in recent years.
While the stock commands premium to the broad market with a price-to-earnings ratio of 29, Apple has proven itself time and again, and its core businesses look as strong as ever. Cook teased a generative AI announcement for later this year, which could be transformative for the company. And the Vision Pro, if successful, could reshape Cook's legacy as an innovator.
Maintaining a pace of 25% average annual returns might be difficult, but the company is still well-positioned to outperform the market for the foreseeable future.
Should you invest $1,000 in Apple right now?
Before you buy stock in Apple, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Apple wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
See the 10 stocks
*Stock Advisor returns as of February 12, 2024
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Microsoft. The Motley Fool has a disclosure policy.
If You Invested $10,000 in Apple When Tim Cook Became CEO, This Is How Much You'd Have Today was originally published by The Motley Fool