Apple is edging closer to a record $4 trillion market valuation, driven by investor optimism over its advancements in artificial intelligence and expectations of a rebound in iPhone sales.
The company’s shares have surged 16% since early November, adding $500 billion to its market capitalization and solidifying its lead over tech rivals Nvidia and Microsoft in the race toward this monumental milestone.
Apple’s market value now stands at approximately $3.85 trillion, surpassing the combined worth of Germany’s and Switzerland’s main stock markets.
The recent rally reflects heightened investor enthusiasm for Apple’s AI efforts, which analysts believe could spark a new wave of iPhone upgrades. “Investor excitement for artificial intelligence and its potential to drive an iPhone supercycle has been a major catalyst,” said Tom Forte, an analyst at Maxim Group.
In December, Apple began integrating OpenAI’s ChatGPT into its devices, following plans announced in June to incorporate generative AI across its app ecosystem. This move is seen as a strategic effort to catch up with competitors like Microsoft, Alphabet, Amazon, and Meta Platforms, which have led in the AI space.
While Apple’s progress in AI has faced criticism for being slow, analysts predict a rebound in iPhone revenue by 2025, aided by broader availability and enhanced AI features.
Despite the AI buzz, Apple’s forecast for modest revenue growth during the holiday season has raised concerns about the momentum of its iPhone 16 series. However, Morgan Stanley analyst Erik Woodring remains optimistic, reiterating Apple as the brokerage’s “top pick” for 2025.
Apple’s price-to-earnings ratio has reached a near three-year high of 33.5, compared to Microsoft’s 31.3 and Nvidia’s 31.7. This valuation premium highlights strong investor confidence, though Warren Buffett’s Berkshire Hathaway, a major Apple shareholder, has sold some of its holdings this year amid concerns over stretched valuations.
Apple faces potential risks from U.S.-China trade tensions, as President-elect Donald Trump has proposed new tariffs on Chinese imports. Analysts believe Apple is likely to secure exemptions for key products, similar to those granted during the 2018 tariff disputes.
The company’s stock experienced a brief setback last week following the Federal Reserve’s projection of a slower pace of rate cuts next year. However, investors expect the broader trend of monetary easing to benefit tech stocks like Apple in 2024.
“Apple’s approach to a $4 trillion market cap is a testament to its enduring dominance in the tech sector,” said Adam Sarhan, CEO of 50 Park Investments. “This milestone reinforces Apple’s position as a market leader and innovator.”
As Apple continues its push toward this historic valuation, its success underscores the tech giant’s ability to navigate challenges and capitalize on emerging opportunities in AI and beyond.
