Apple shares are on the verge of hitting a record $4 trillion valuation, buoyed by a sharp rise in its price. The company’s recent advances in artificial intelligence (AI) and hopes of a recovery in iPhone sales have sparked excitement among investors.
Since early November, Apple’s stock has climbed about 16%, adding about $500 billion to its market capitalization. As of its most recent close, the tech giant’s valuation was about $3.85 trillion, surpassing the combined value of the German and Swiss stock exchanges. That growth has helped Apple leapfrog rivals including Nvidia and Microsoft in the race toward the $4 trillion mark.
AI Advances Boost Investor Confidence
Apple’s stock rally is largely attributed to investor optimism about the company’s AI advancements, as well as expectations for a supercycle of iPhone upgrades. Despite concerns about slower growth in recent quarters, the company’s market performance reflects renewed confidence in its future prospects.
Earlier this month, Apple began integrating OpenAI’s ChatGPT into its devices, following its announcement that it would incorporate generative AI into its suite of apps. The move helped boost investor confidence, with many anticipating that AI could play a key role in revitalizing iPhone sales.
Apple’s efforts to improve its AI capabilities are seen as a key part of its strategy to unleash the next wave of iPhone evolutions, including the launch of the iPhone 16 series. Analysts are optimistic that the combination of AI advancements and a refreshed product lineup could revive consumer demand for the iPhone, especially in 2025.
Although Apple’s stock price is recovering strongly, questions remain about the near-term outlook for its iPhone business. The company forecast modest revenue growth for its fiscal first quarter, with expectations for low-to-mid-single-digit increases. That forecast has raised concerns about the momentum of the iPhone 16 series, particularly during the holiday season.
However, industry analysts are more optimistic about the future, with many predicting a rebound in iPhone sales by 2025. According to LSEG data, iPhone revenue is expected to recover in the coming years, driven by AI-powered updates and a renewed focus on hardware innovation.
Apple’s recent stock rally has pushed its price-to-earnings (P/E) ratio to near a three-year high of 33.5, outpacing rivals such as Microsoft and Nvidia. While that valuation has raised concerns about the stock’s potential overvaluation, overall market sentiment remains positive. Investors are hoping that monetary easing will continue to support stock markets next year, despite recent warnings from the Federal Reserve about slower rate cuts.
In addition to its AI efforts, Apple is also working to reduce its reliance on outside suppliers, particularly in the crucial area of mobile chips. The company is preparing to launch its own custom cellular modem chips, which will debut in the iPhone SE, Apple’s entry-level smartphone. The move is a major step toward reducing the company’s reliance on Qualcomm, which has dominated the modem market for years.
Apple’s modem project, which has been in development for more than five years, is expected to be a game-changer for the company. The project follows Apple’s $1 billion acquisition of Intel’s modem division in 2019, a strategic move aimed at bolstering its in-house chip design capabilities.
While the company has faced several challenges, including technical hurdles and management changes, it is now set to introduce its new modem by 2027, to surpass Qualcomm’s technology in the coming years.
