Despite the tech sector's summer collapse, Apple CEO Steve Jobs' cancer scare, intensified online-music competition, and supply issues at Apple, shares in the company are up more than 45 per cent this year.

One reason Apple stock has been outperforming the overall market is the iPod and the iTunes Music Store. In the third quarter, 16 per cent of Apple's sales were music-related. A year ago this figure was 8 per cent. Lehman Brothers analyst Harry Blount told CNN Money: "Nearly a quarter of Apple's sales for fiscal 2005 could be from the iPod and iTunes."

Another reason is customers' healthy interest in Apple's products. Fulcrum Global Partners analyst Robert Cihra said: "If you look at last quarter, Apple started to show some decent growth in the Mac business as well. Demand is driven more by Apple's own product cycles than PC market trends."

However, the company is experiencing supply issues. FTN Midwest Research analyst Bill Fearnley said: "There isn't a demand issue, but there will be some turbulence near-term based purely on component delivery issues that are beyond Apple's control." For that reason he has trimmed his earnings estimates for Apple's fiscal fourth quarter, but raised estimates for 2005.

Analysts have high expectations for Apple in 2005. This January, Thomson First Call analysts were predicting earnings of 59 cents a share for fiscal 2005. Now analysts are estimating 89 cents a share.

The CNN report concludes: "If Apple's stock has been outperforming the overall market thanks mainly to one product's success, just imagine how much more room there could be if all of Apple's units start clicking at the same time."