Tech giant Apple is driving the market value race with new investments in artificial intelligence (AI) technology. The company is on the brink of a $4 trillion milestone as its share price soars on promises of AI-powered upgrades to the iPhone.
The company is going to leave technology companies like Nvidia and Microsoft behind. Since the beginning of last November, Apple's share price has increased by about 16 percent. This has added nearly $500 billion to its market capitalization.
Maxim Group analyst Tom Forte said that the increase in Apple's market value is a reflection of investors' enthusiasm for artificial intelligence. This will create a super cycle of iPhone upgrades.
Apple, the first US company to enter the trillion book, has already crossed the three trillion dollar milestone. Apple's overall revenue is expected to grow by a 'small to moderate amount' in the first quarter of the current fiscal year.
Apple has faced criticism in recent years for being slow to define its artificial intelligence (AI) strategy. On the other hand, Microsoft, Alphabet, Amazon and Meta have gone on to dominate the platform technology.
Nvidia has benefited the most from the rise of artificial intelligence (AI). The company's shares have risen more than 800 percent in the past two years. Apple's shares have nearly doubled over the same period. In early December, Apple began integrating OpenAI's ChatGPT into its devices. It had earlier announced in June that it would integrate generative AI technology into its suite of apps.
Although there are questions about the speed of sales of the iPhone 16 model, data from the London Stock Exchange or LSEG says that the company's income from the iPhone will increase in 2025.
Morgan Stanley analyst Eric Woodring said iPhone demand is still low due to limited Apple Intelligence features and geographic availability. If these two areas expand, the demand for iPhone will also increase.
According to LSEG data, recent share price appreciation has pushed Apple's price-to-earnings ratio (PE ratio) to 33.5, the highest in nearly three years. Meanwhile, while Microsoft's PE ratio is 31.3 and Nvidia's is 31.7.
However, if the newly elected US President Donald Trump imposes at least 10 percent tax on products from China, Apple may be at risk.
“It is likely that Apple products such as iPhones, Macs and iPads will be exempted from tariffs, as was the case in the first round of tariffs on Chinese goods in 2018,” said analyst Eric Woodring.
Apple is currently worth more than the combined market value of the major stock markets of Germany and Switzerland. Analysts expect the company's earnings to grow in 2025 and remain an attractive company for investors.
References: Reuters
