Apple Inc. made Wall Street history on Wednesday when its 2020 stock surge pushed the market value over US$2 trillion ($2.74 trillion), the first time a US company has surpassed that level.

While it took Apple 38 years to reach its first US$1 trillion in value, the next trillion only took two years after the company rapidly expanded its hardware ecosystem with more iPhones and new Apple Watches and AirPods, launched digital services and leveraged its base of 1.5 billion devices to generate more recurring revenue.

The Cupertino, California-based company, run by Chief Executive Officer Tim Cook, has also been buoyed by the broad adoption of mobile internet-connected devices, apps and other cloud services -- especially during the Covid-19 lockdown. Buybacks and dividends have lured new investors, such as Warren Buffett, while an imminent stock split should keep smaller investors interested, too.

The market milestone “again demonstrates Cook’s amazing acumen as Apple’s CEO,” according to Michael Gartenberg, a former senior marketing executive at the iPhone maker. “The key to Apple’s success has been an unwavering commitment to its attention to the details of things that other companies might find mundane.”

Shares of the iPhone maker rose as much as 1.4% to US$468.65 in New York trading. Its current market value almost matched the entire Russell 2000 Index of small-cap stocks, a benchmark that has fallen this year as pandemic shutdowns punish the US economy.

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The gains have solidified Apple’s position as the most valuable company in the world. While Saudi Aramco briefly boasted a US$2 trillion valuation in December, shares of Saudi Arabia’s national oil company subsequently dropped, and it currently trades with a market cap of about US$1.8 trillion. Among the US companies, Apple is trailed by Amazon.com Inc. and Microsoft Corp., both of which have market caps under US$1.7 trillion.

The past two years have not been easy for Apple, though. Cook has had to manoeuvre through a trade war between the US and China, where most Apple devices are assembled. The company missed its holiday sales forecast in 2019 for the first time in nearly two decades, triggering a plunge in the shares. Now Apple’s App Store is under fire from regulators and some developers who complain that the company charges high fees and limits third-party applications in favour of its own offerings.

Cook, Apple’s top executive since 2011, has handled most of these challenges well so far. He talked US President Donald Trump out of imposing large tariffs on key products like the iPhone and AirPods, and worked with the administration to keep production of the Mac Pro computer in Texas.

The CEO had to close hundreds of Apple retail stores due to the pandemic this year, and many employees were forced to work remotely. In the midst of these disruptions, Apple launched new iPad Pros, a lower cost iPhone and ran a virtual conference that introduced new tools to support the next range of devices. Apple recently reported quarterly sales and profit that far exceeded Wall Street expectations.

“If we stay focused on doing what we do best, if we keep investing, if we manage the business wisely and make decisions collaboratively, if we take care of our teams, if our teams take care of their work, I don’t see any reason to be anything but optimistic,” Cook told staff in April.

While Apple has launched new digital services in the past year, none are off to particularly hot starts, and its multibillion-dollar investment in original video has yet to show meaningful growth or revenue. Still, investors and analysts are optimistic about Apple’s new services eventually finding their footing. Bloomberg News reported earlier this month that Apple is preparing a series of “Apple One” bundles to increase recurring revenue.

“The company has been able to create a healthy gross margin because they’ve added services to their swath of hardware,” said Shannon Cross of Cross Research. “The services growth appears to be sustainable for at least the medium term as people continue to use their connected devices more and more.”

To keep the stock rising, Apple will need to generate more growth from hardware, while continuing to expand its services business, she added.

The technology giant is preparing four new iPhones with 5G capability for this fall, three years after the launch of the iPhone X in 2017. Tens of millions of users who upgraded to the iPhone X due to its new design are likely inching toward needing a new model. That could set up Apple for a large upgrade cycle over this holiday shopping season and into next year.

The company is also looking to further solidify its ecosystem with new accessories such as over-ear headphones, a cheaper smart speaker and new iPads, Bloomberg News has reported. Apple is taking more control over the supply of key components, too, developing Macs with its own processors and future iPhones with its own cellular modems.

While it works on new versions of existing products, Apple is also developing a pair of virtual and augmented-reality devices: a VR headset with some AR capabilities for release as early as 2022 and lightweight AR glasses that could launch as soon as 2023, Bloomberg News has reported.

The new products could keep users locked into an ecosystem that is likely to grow beyond the current base of roughly 1.5 billion active devices. The more recent push toward hardware and services subscriptions adds another reason to stick with Apple’s offerings and is particularly enticing to investors looking for steady income-generating businesses.

Despite several hardware successes, particularly with the Apple Watch and AirPods, Apple has had some misses during its rally to US$2 trillion. The company’s HomePod smart speaker has lagged far behind the competition. That has helped Amazon.com Inc. and Alphabet Inc.’s Google move ahead in artificial intelligence and voice-based computing. Apple has also faltered in smart home integrations with appliances, dropping behind the same two competitors.

Logan Purk, an analyst at Edward D Jones & Co., reiterated his hold rating on Apple shares, recommending that “new money look elsewhere in the tech space” for better opportunities. “The big catalysts are fairly well priced in, the 5G iPhone especially,” he added. “There aren’t a lot of stones left unturned.”

The average analyst 12 month price target is US$429.53, below the current share price, according to data compiled by Bloomberg. There are five sell ratings, 12 holds and 27 buys.