Apple is nearing a historic $4 trillion valuation, fueled by investors betting the company’s much-anticipated artificial intelligence improvements will revive sluggish iPhone sales.
The company has led Nvidia and Microsoft in the race to the monumental milestone, thanks to a roughly 16% jump in shares since early November that has added about $500 billion to its market capitalization.
Apple’s stock rally
Apple’s latest rally reflects “investor excitement about artificial intelligence and the expectation that it will lead to a supercycle of iPhone upgrades.”
With a market value of about $3.85 trillion as of the last close, Apple dwarfs the combined value of the German and Swiss stock exchanges.
The Silicon Valley company, driven by the so-called iPhone supercycle, was the first American company to reach the previous trillion-dollar milestone.
In recent years, Apple has been criticized for being slow to outline its strategy on artificial intelligence, while Microsoft, Alphabet, Amazon and Meta Platforms have moved to dominate the emerging technology.
Nvidia shares, perhaps the biggest gainer in the AI race, have risen more than 800% in the past two years, compared with Apple shares nearly doubling over the same period.
Apple earlier in December began integrating OpenAI’s ChatGPT into its devices, after revealing plans in June to integrate the creative AI into its suite of apps.
The company expects overall revenue to grow “low to mid-single digits” during its fiscal first quarter — a modest growth forecast for the holiday shopping season — raising questions about the momentum for the iPhone 16 lineup.
Market estimates
However, LSEG data showed that analysts expect iPhone revenue to rebound in 2025.
The recent rally in shares has pushed Apple’s price-to-earnings ratio to a near three-year high of 33.5, compared with 31.3 for Microsoft and 31.7 for Nvidia, according to LSEG data.
Warren Buffett’s Berkshire Hathaway has sold Apple shares — its top holding — this year as the group largely exited the stock amid concerns about overvalued stocks.
The Geopolitical Risk Benchmark
Apple faces the risk of retaliation if U.S. President-elect Donald Trump follows through on his promise to impose tariffs of at least 10% on goods coming from China.
Apple shares fell on Wednesday amid a decline on Wall Street after the Federal Reserve forecast a slower pace of interest rate cuts next year, but investors expect the broad trend of monetary easing to support stock markets next year.
The Fed’s action could end up having a bigger impact on some of the other cyclical sectors, such as consumer discretionary and financials, and less on technology.
Apple’s approach to $4 trillion in market cap is a testament to its continued dominance in the technology sector. This milestone reinforces Apple’s position as a market leader and innovator.
