Apple is approaching a historic stock market valuation of $4 trillion, driven by investors’ hopes for progress in the company’s long-awaited AI enhancements to rejuvenate sluggish iPhone sales.
The company has overtaken Nvidia and Microsoft in the race to achieve this historic feat, thanks to a nearly 16% rise in shares since the beginning of November, adding about $500 billion to its market capitalization.
Tom Forte, an analyst at Maxim Group, who has a “hold” rating, said the latest rally in Apple’s shares “reflects investors’ enthusiasm for artificial intelligence and the expectation that it will result in a supercycle of iPhone upgrades.”
Valued at approximately $3.85 trillion at the last close, Apple dwarfs the combined value of the main stock markets of Germany and Switzerland.
The Silicon Valley firm, driven by the so-called iPhone supercycle, was the first US company to reach the previous trillion-dollar milestone.
In recent years, the company has attracted criticism for slowing down its artificial intelligence strategy, while Microsoft, Alphabet, Amazon and Meta Platform have moved to dominate the emerging technology.
Shares of Nvidia, the biggest AI beneficiary, have risen more than 800% over the past two years, while Apple’s shares have nearly doubled during the same period.
Apple began integrating OpenAI’s ChatGPIT into its devices in early December after unveiling plans to integrate generative AI technology into its app suite in June.
The company expects total revenue to grow by “low to mid-single digits” during the first quarter of its fiscal year — with a modest increase forecast for the holiday shopping season — raising questions about the pace of the iPhone 16 series. Have been.
However, LSEG data showed that analysts expect a jump in revenue from iPhones in 2025.
Morgan Stanley analyst Eric Woodring said, “While demand for the iPhone is still low in the near term…this is a function of limited Apple Intelligence features and geographic availability, and as both expand, it will lead to iPhone demand.” “will help in improving the situation.” One note reiterates Apple as the brokerage’s “top pick” in 2025.
The recent surge in shares has pushed Apple’s price-to-earnings ratio to a nearly 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 off Apple shares – its top holding – this year, as the group retreated from equities due to concerns over its broader valuation.
“I suspect that in three years the stock won’t look as expensive as it looks today,” said Eric Clark, portfolio manager of the Rational Dynamic Brands Fund, which holds Apple shares.
Apple will face the risk of retaliatory tariffs if US President-elect Donald Trump fulfills his promise to impose at least a 10% tariff on goods coming from China.
“We believe it’s possible that Apple could receive a waiver on products like the iPhone, Mac and iPad, similar to the first round of China’s tariffs in 2018,” Woodring said.
Apple shares fell last Wednesday amid a selloff on Wall Street after the Federal Reserve forecast a slower pace of rate cuts next year, but investors expect stock markets next year to be supported by a broader trend of monetary easing. will get.
“Technology has been perceived by investors as a new form of defensive sector due to the growth in their earnings,” said Sam Stovall, chief investment strategist at CFRA Research.
The Fed’s actions “could have a greater impact on some other cyclical sectors such as consumer discretionary and financials and less on technology.”
Adam Sirhan, Chief Executive Officer of 50 Park Investments, said, “Apple reaching $4 trillion market cap is testament to its enduring dominance in the tech sector. This milestone solidifies Apple’s position as a market leader and innovator “
