The Most Important Apple Analyst On Wall Street Says The Stock Is Going To $1,000

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Photo: Photo by Kevork Djansezian/Getty Images

Apple analyst Gene Munster of Piper Jaffray has finally come out and said it: He thinks Apple’s stock will be at $1,000 in 2014, making it the world’s first trillion dollar company.”Fundamentally, we believe shares can reach $1,000 based on our belief Apple will continue to win in global mobile devices,” says Munster in a note this morning. He also says, “we believe the real story is earnings growth.”

Apple’s market cap today is $600 billion. The next $400 billion will come from investors abandoning Apple’s rivals, says Munster.

Here’s an explanation:

We believe there will be enough value over the next two plus years for Apple to add another $400 billion in market cap from a combination of growth in dollars invested in tech and continued shift from major Apple competitors. First, we believe dollars invested in US technology companies will increase ~5% y/y on average for the next three years (CY12-CY14). By comparison, dollars invested in US tech companies were up 9% y/y in 2011. Therefore, the tech sector will add ~$390 billion in market cap through 2014. We assume Apple could capture half of this market cap (from 85% in the 4 years prior). Second, the companies we consider to be the 10 most relevant competitors to Apple (Samsung, HTC, RIMM, NOK, SNE, DELL, HP, MSFT, INTC, GOOG) represent nearly $1 trillion in market cap today. We believe 20% of that value, or ~$200 billion could shift to Apple through 2014. Thus there is potential for Apple to repeat history and add another $400 billion to its market cap. At a $1,000 share price (roughly $1 trillion in market cap) Apple would represent 26% of the total US tech market cap from 17% today.

On a more fundamental level, he thinks Apple controls 60% of the tablet market through 2015, and sells a boatload of iPhones in the next few years. Below are his assumptions of iPhone and iPad sales that drive Apple to a trillion.

Piper Jaffray iPhone and iPad estimates

Photo: Piper Jaffray

This isn’t the first time Munster has talked about Apple going to $1,000. He (basically) told us it would be at $1,000 in 2010. Watch his explanation here >

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