"Wall Street" values companies by projecting future cash flows discounted back to the present. Note AAPL is only making that much per Q for the second time in its history. In 2011 it made only 60% of what it makes now. In 2010 30%. If someone can guarantee that AAPL will continue its profitability at its present level of course it is very undervalued. But there is no guarantee and right now it looks like that investors does not give it a very high chance. Just to maintain its current pace AAPL needs to sell close to 200B this year or about $30 to every single person on the planet. But that is not enough it will have to do that year after year for an extended period of time. You say P/E of 10 -- then you better be able to do what you are doing for at least 10 years. And that is always hard to see for tech once a company stops growing -- so called inflection point. Case in point is to check out how long Motorola, Nokia, RIM each maintained their leadership position in mobile. And once they fell, they fell hard. Maybe this time it IS different.
