Apple is currently approaching its historical market capitalization indicator of $4 trillion.
The mentioned dynamic of the securities of the specified technology giant is largely related to investor enthusiasm for the launch of the company’s long-awaited efforts in the area of artificial intelligence. Apple’s activities to develop and integrate AI into its tangible products and digital corporate ecosystem in the context of the impact on the brand’s financial performance are expected to offset such a negative factor as sluggish iPhone sales.
In a kind of race for a high level of market capitalization, the mentioned company is currently consolidating its position ahead of technology giants such as Microsoft and Nvidia. Since the beginning of November, the iPhone developer’s values of shares have shown an increase of approximately 16%. The corresponding dynamic increased Apple’s market capitalization by roughly $500 billion in monetary terms.
Tom Forte, an analyst at Maxim Group, said that the latest growth in the value of shares of the mentioned company reflects investors’ enthusiasm for artificial intelligence and the expectation that this will result in a supercycle of iPhone upgrades.
At the past close of trading, Apple was valued at approximately $3.85 trillion. It is worth noting that this indicator exceeds the combined value of the main stock markets of Germany and Switzerland.
Apple, a financial dimension which existence is expanding mainly as a result of the implementation of supercycles of upgrading the iPhone, became the first US company to reach the previous trillion-dollar milestones. It is worth noting that in recent years, the technology giant has faced criticism over the very slow pace of its efforts to develop artificial intelligence. In 2024, Apple unveiled its long-awaited strategy for the elaborating of machine intelligence. At the same time, this strategy, as a kind of existing and realizable fact, does not negate the circumstance that such large companies as Meta Platforms, Alphabet, Amazon, and Microsoft have pulled ahead in their quest to dominate the emerging technology area.
It is worth mentioning that this year the iPhone developer unveiled Apple Intelligence, a suite of advanced artificial intelligence capabilities integrated directly into the brand’s digital ecosystem.
There is currently a so-called machine intelligence boom in the world. The corresponding process began after the debut of ChatGPT from OpenAI in November 2022. This chatbot demonstrated to the consumer audience the impressive capabilities of artificial intelligence related to the processing and analysis of large amounts of information, and the generation of original content. Many companies have become beneficiaries of the AI boom. In the relevant context, the example of Nvidia is illustrative. The value of shares of this company, which develops graphics processing units for training and ensuring the subsequent operation of artificial intelligence systems, has grown by more than 800% over the past two years. Over the same period, the value of Apple’s securities has almost doubled. This year, Nvidia’s market capitalization has crossed the $3 trillion mark.
The current month, Apple integrated OpenAI’s ChatGPT into its devices.
The iPhone developer expects its overall revenue to increase from low- to mid-single digits during the first fiscal quarter. It is worth noting that this is a very moderate forecast for the holiday shopping season. Against this background, logical questions are being formed about the dynamic of sales of the iPhone 16 series.
At the same time, LSEG data suggests that experts expect a rebound in Apple smartphone sales.
Morgan Stanley analyst Erik Woodring said in a note that iPhone demand is still muted in the short term, due to the impact of factors such as limited features of Apple Intelligence and geographic availability. According to the expert, the broadening of the mentioned factors will contribute to the growth of smartphone sales of the technology giant. Erik Woodring also stated that Apple is the brokerage’s top pick heading into 2025.
The surge in stock values of the iPhone developer has led to the technology giant’s price-to-earnings ratio reaching an almost three-year high of 33.5. Similar figures for Microsoft and Nvidia are 31.3 and 31.7, respectively. This information was published by LSEG.
Warren Buffett’s Berkshire Hathaway sold shares of Apple this year. The conglomerate as a whole has retreated from the technology giant’s shares due to concerns about stretched valuations. It is worth noting that in the current year, a kind of surge of anxiety was recorded among investors at a certain point due to the possible excessive valuation of securities driven by artificial intelligence.
Eric Clark, portfolio manager of the Rational Dynamic Brands Fund, which holds Apple shares, suggests that the stock in three years will not look as expensive as it does today.
The iPhone developer is currently facing the risk of the consequences of potential tariff hikes on imported goods that could be imposed by Washington. Donald Trump, who won the United States presidential election last month and will return to the White House in January, has the corresponding intentions. These plans relate, among other things, to goods imported from China. For Apple, in the context of the relevant prospects, the risk lies in the potential retaliatory trade measures from the Asian country. China continues to be one of the most important markets for the technology giant. Last fiscal year, the Asian country accounted for more than 35% of Apple’s total sales, according to data from the German online platform Statista. In monetary terms, the corresponding figure is more than $70 billion. In recent years, Apple has faced certain difficulties in its operations in China. Competition from homegrown manufacturers has increased in the Asian market. China also has a kind of tacit ban on the use of Apple devices in government institutions and companies backed by the government. At the same time, these difficulties do not negate the fact that the Asian country continues to generate a significant portion of the overall revenue of the technology giant. China’s share of Apple’s total sales has also increased in recent years. Last fiscal year, the corresponding figure, as already mentioned, exceeded 35%. In fiscal 2019, this reading barely exceeded 20%.
Erik Woodring suggests that as part of the imposition of new tariffs on goods imported from China to the United States, an exclusion for Apple will be provided. According to the expert, the corresponding exclusion will apply to iPhone, Mac, and iPad. It is worth noting that a similar practice against Apple was used in 2018 during the first round of tightening US tariffs on Chinese goods.
Last week, against the backdrop of a selloff on Wall Street, the technology giant’s securities demonstrated a downward dynamic, which does not negate the company’s movement towards a market capitalization of $4 trillion. The mentioned negative dynamic is related to the Federal Reserve’s forecast of a smaller scale of interest rate cuts next year compared to preliminary expectations about the degree of intensity of the corresponding process. At the same time, experts cited by the media claim that the broader tendency of monetary policy easing in the United States will be a factor in supporting stock markets next year.
Sam Stovall, chief investment strategist at CFRA Research, said that the technology has been regarded by investors as a new form of a defensive sector because of their earnings growth.
Adam Sarhan, chief executive officer of 50 Park Investments, said that Apple’s approaching a market capitalization of $4 trillion is evidence of the company’s enduring dominance in the technology sector. The expert also noted that the mentioned milestone reinforces the brand’s position as a market leader and innovator.
Currently, for Apple, the main factors moving forward are its long-term power as one of the world’s largest manufacturers of technological products and the development of artificial intelligence in its corporate space. At the same time, in this case, there is an example of AI becoming increasingly important both technologically and financially.
As we have reported earlier, Indonesia Wants Apple to Increase Investments in Country.
