Most market experts would not have expected Apple’s (AAPL) market value to have passed Walmart’s (WMT) or GE’s (GE). But, it has even though the maker of the iPad and iPod had revenue of only $36 billion in its last fiscal year while Walmart’s was $408 billion and GE’s $157 billion.

Apple’s market value has reached $218 billion and is rising. Due to investor appreciation of Apple’s innovation, rapidly rising revenue and net income, and powerful brand, the price of the firm’s stock is up 110% over the last year.

Apple’s market cap ranks No.3 among stocks traded on US exchanges. It trails only Microsoft (MSFT) at $257 billion and Exxon Mobil (XOM) at $322 billion. Several analysts recently increased their price targets for Apple to more than $300. Apple trades at an all-time high of over $238 a share. If the stock does rise by 26% to $300, the firm’s market cap would be $272  billion. Microsoft’s stock could gain 5% and Apple would still take the No.2 spot in market value.

The case for Apple passing Microsoft is not much of a stretch. Apple’s older products, the Mac and iPod, would have to hold their own in their respective markets. The Mac’s share of the US computer market is about 7%.  Its sales are rising fast enough that it should be able to keep that position. The iPod really has no direct competition and iTunes has such a large share of the online music market that its broad library of content will help the iPod keep its spot among multimedia players.

The iPhone will have to continue to have blistering sales for Apple to continue to do extremely well. The handset is now a third of Apple’s revenue. Most analysts expect over 7 million iPhones to be sold in the current corner and that is without the handset having a strong foothold in large markets such as China. The biggest threat to the iPhone’s success seems to be the emergence of Google (GOOG) Android-powered handsets which have grown rapidly and seem to be taking market share from established operations like RIM (RIMM). Apple will have to show Wall St. that Android is not a significant threat to its smartphone business. Jobs & Co. expect to launch a new version of the iPhone this summer, which should help sales.

The wild card in Apple’s growth is the new iPad. Investors expect it to be a success. Analyst estimates of its sales in the first year after its launch are for five million to ten million units to be shipped. Any number well short of that will cause Wall St. to believe that Apple has lost its amazing touch with consumers. That would almost certainly stop the firm’s stock from advancing.

Apple will announce earnings in about a month. Revenue is expected to above $8 billion. Investors will expect the company to top its own EPS forecasts, which it almost always does. An upside surprise on earnings will almost certainly send Apple’s shares higher.

Apple’s market cap could pass Microsoft’s by the middle of the year.

Douglas A. McIntyre

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