What a ride it has been for Apple (NASDAQ: AAPL) and its shareholders over the years. The company celebrated its 50th anniversary on April 1, evolving from an underdog in the computer market to arguably the world’s most prominent consumer-facing business today.
Long-term investors have also made fortunes from Apple stock, which has returned over 97,000% since 1990, including dividends.
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Given Apple’s $3.75 trillion market cap, investors shouldn’t anticipate future performance to rival the past. That said, how much can investors count on Apple stock over the next 50 years?
Apple’s roots are in consumer electronics, but the iPhone, launched in 2007, was the pivotal product that made the company the juggernaut it is now. Today, the iPhone is the most popular smartphone in the United States, with a 50% to 65% market share, and it accounts for an estimated 32% of the global market.
Apple has masterfully leveraged the iPhone’s popularity to build a sprawling iOS ecosystem with several competitive advantages.
Hardware and software integration means your iPhone works seamlessly with your Mac, MacBook, iPad, Apple Watch, or AirPods. That both gives users a better experience, and makes it more painful to leave iOS with every device they use. Additionally, it opens up high-margin cross-selling for subscription services, royalties on app downloads, and new products.
There are now 2.5 billion active iOS devices worldwide, giving Apple a firm grip on a massive customer base that most companies could only dream of.
Electronic devices are becoming increasingly central to modern life, so the iOS ecosystem should have long-term staying power. Apple is also still pushing out new hardware products. The new MacBook Neo targets entry-level computer users, and the company is reportedly developing AI glasses that would represent a brand-new product category.
Apple’s remarkably efficient supply chain and product integration help it generate a 68% return on invested capital. Operating that efficiently at Apple’s size is how the company generated more than $123 billion in free cash flow over the past four quarters. Apple then uses that cash to buy back stock to boost earnings per share, while also paying a growing dividend to shareholders.
