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Tickers in this Article: AAPL, GOOG, KFT, AZO, XOM, DELL
No discussion of technology stocks is complete today without mentioning Apple (Nasdaq:AAPL). In this rapidly changing industry, it's all about innovation and staying ahead of the competition. Today, Apple is the single most innovative company on the planet. No surprise then that the share price recently touched an all time high and is now trading near $340 per share.

How Far Can Apple Soar?
At the current share price of $339, Apple now commands a valuation of $313 billion or one third of a trillion dollars. It's market cap is now the second largest in the world only behind Exxon Mobil (NYSE:XOM). Indeed, a company that makes phones and computers is almost just as valuable as one of the largest oil companies on the planet. At the current moment, Apple has all the momentum. It recently announced the launch of the iPad2 which is likely going to be a bigger hit than the original iPad. So from a momentum standpoint, there's nothing stopping the shares from going higher. Mutual funds, for better or worse, will recognize that it's the technology stock to own in any portfolio with any technology exposure. That will likely add fuel to the fire.

Not About Valuation Anymore
When you consider that Apple shares just trade at 19 times trailing earnings, that looks relatively attractive in the industry. Google (Nasdaq:GOOG) trades for 22 times earnings while Dell (Nasdaq: DELL) trades for 11 times earnings, respectively. So when you consider potential growth ahead for Apple as devices like the new iPad and iPhone 4 catch on outside the US, you would expect a much higher valuation from Mr. Market. Yet therein lies the problem, one that should make all investors reconsider if buying Apple today is a wise bet.

The reason why the P/E can not expand to a level that one would think a company such as Apple may command in an irrational market is the enormous amount of buying now required to move shares. To move Apple shares up another 10% would require nearly $30 billion dollars. That's equivalent to buying more than half of Kraft Foods (NYSE:KFT), the second largest food company in the world. You could buy AutoZone (NYSE:AZO), the largest auto parts retailer in the US, nearly three times over for $30 billion.

A Victim of It's Own Success
In the overall scheme of investment dollars, $30 billion is not as huge as it sounds. Nevertheless, as wonderful as a company as Apple is and the future growth ahead of the company, it's likely the best and safest gains have left this company for now. (For related reading, take a look at 4 Industry-Changing Tech Trends) Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

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