Morgan Stanley: Apple car could push company's valuation beyond $1 trillion

According to the new bull-case price target set Monday by Morgan Stanley, Apple Inc.’s experimentation with car technology could boost the company’s valuation beyond $1 trillion within the next 12 months from nearly $750 billion today.

"We are convinced that Apple will have a significant presence in the auto industry in the coming years."

Previously, Morgan Stanley's bull case did not take into consideration the e-car opportunity. The brokerage raised its 12-month stock price target on Apple AAPL to $160, from $133 previously, and established a $190 bull-case scenario, up from $160.

Katy Huberty, one of the most bullish Apple analysts on Wall Street, say that Apple’s expanding ecosystem, including the Apple Watch and CarPlay, have created a “virtuous cycle” that could quadruple Apple’s total addressable market by 2020.

A number of reports have suggested that the company is hiring auto experts, including former Tesla Motors Inc. employees, and has established a top-secret team to invest in car technologies, although the tech giant has not confirmed yet it is intended to develop its own car.

The company’s iOS-based CarPlay, which brings iPhone features to the touch screen control panel on a vehicle’s dashboard, was applied in several car models this year. Thus, Morgan Stanley auto analyst Adam Jonas said it would be natural for the company to develop beyond infotainment to the rest of the interior, particularly if driverless-car technologies begin to be more integrated within new vehicles.

Morgan Stanley's calculations put the total automotive addressable market at $10 trillion, with the annual revenue potential on new vehicles amounting to roughly $1.6 trillion, compared with the current global smartphone market of $400 billion, says MarketWatch.

As Jonas considers, if Apple were to corner just 25% of the value of the car, its revenue potential would equate to that of the entire smartphone industry today.

In the recent trade, Apple's shares traded up 0.2% to $128.71. They are up more than 71% over the past year.