By Alan Murray and David Meyer
August 1, 2018

Good morning. Alan Murray here, back from a week’s vacation that included three days of cycling in France and a prime seat for the final stage of the Tour de France, courtesy of CA Technologies CEO Mike Gregoire—a blazing bicyclist himself.

In the news this morning: Apple has taken a clear lead in a competition as exciting as Le Tour—the race to become the world’s first trillion-dollar company. Earlier this year, analysts thought Alphabet, Amazon or even Microsoft might make the attack first. But Apple hammered ahead with an earnings report that pushed the company’s market value to $956 billion—well past the peloton of Alphabet at $885 billion, Amazon at $876 billion, and Microsoft at $848 billion.

Ironically, the surge came the same day reports showed Chinese phone maker Huawei had overtaken Apple to become the world’s second largest supplier of smartphones, after Samsung. But what Apple lost in volume share, it made up for in price…enjoying a 20% jump in the average price of iPhones shipped. The company also saw a stunning 31% growth in services revenue—which includes ApplePay, iCloud and AppleMusic. And it saw a solid 19% sales increase in China. To top it off, Apple CEO Tim Cook said the company expected an even stronger third quarter, with revenue of $60 billion to $62 billion, up from $53 billion in the current quarter.

With numbers like those, the only thing likely to stop Apple from winning the trillion-dollar race is a trade war with China. Cook talked at length about trade in his earnings conference call, saying he was “optimistic that countries will get through this.” He explained: “There’s an inescapable mutuality between the U.S. and China that serves as a magnet to bring both countries together. Each country can only prosper if the other does. And of course the world needs both the U.S. and China to prosper for the world to do well.”

By the way, while some investors are eager to see Apple use more of its $244 billion cash hoard to buy back shares, that won’t help the company reach the trillion dollar mark. A buyback boosts the stock price, but that’s offset by a decline in shares outstanding.

Also this morning, Pepsi CEO Indra Nooyi has penned a piece for Fortune explaining why the company has decided to go “all in” on recycling. You can read it here.

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

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