Apple Inc. is nearing a landmark stock market valuation of $4 trillion (approximately Rs. 3,40,73,552 crore), largely driven by positive investor sentiment surrounding advancements in the company’s artificial intelligence capabilities, aimed at revitalizing sluggish iPhone sales.
The tech giant has surpassed Nvidia and Microsoft in the race toward this significant financial milestone. This surge follows a 16 percent increase in its stock price since early November, which has contributed an impressive $500 billion (around Rs. 42,59,194 crore) to Apple’s market capitalisation.
According to Tom Forte, an analyst at Maxim Group, the excitement among investors regarding artificial intelligence and the anticipation of a major cycle of iPhone upgrades have fueled the recent rally. Forte maintains a “hold” rating on Apple’s stock.
At its most recent closing, Apple is valued at about $3.85 trillion (roughly Rs. 3,27,95,962 crore), dwarfing the combined market values of Germany and Switzerland’s primary stock exchanges.
Having pioneered the concept of iPhone supercycles, Apple was the first U.S. firm to reach past trillion-dollar benchmarks. However, the company has faced criticism for its perceived slow pace in developing an AI strategy, especially while competitors like Microsoft, Alphabet, Amazon, and Meta Platforms have gained significant ground in this emerging field.
Nvidia, the leading beneficiary of the AI boom, has seen its shares soar by over 800 percent in the last two years, while Apple’s shares have nearly doubled during that timeframe.
Earlier this month, Apple began incorporating OpenAI’s ChatGPT into its devices, following the announcement in June to embed generative AI technology into its app suite.
The company forecasts modest revenue growth of “low- to mid-single digits” for its fiscal first quarter, a cautious outlook for the holiday season. This raises concerns about the momentum for its upcoming iPhone 16 series.
Despite the current subdued demand for iPhones, analysts predict a revenue rebound in 2025. Morgan Stanley analyst Erik Woodring noted that the short-term weakness is tied to limited availability of Apple Intelligence features. He emphasizes that expanding these features will likely enhance iPhone demand and keeps Apple as the brokerage’s preferred choice heading into 2025.
The recent stock rally has elevated Apple’s price-to-earnings ratio to a near three-year high of 33.5, surpassing Microsoft and Nvidia, which stand at 31.3 and 31.7, respectively, according to LSEG data.
Warren Buffett’s Berkshire Hathaway has divested some shares of Apple this year, its largest investment, as the conglomerate has retracted from equities due to fears of inflated valuations.
Eric Clark, portfolio manager of the Rational Dynamic Brands Fund, which maintains a position in Apple shares, suggested that in three years, the stock may not appear as overpriced as it currently seems.
Moreover, Apple could face tariffs if U.S. President-elect Donald Trump follows through on his intent to impose tariffs of at least 10 percent on imports from China. Woodring speculates that Apple may receive exemptions on key products such as the iPhone, Mac, and iPad, mirroring the exclusions seen during the initial round of tariffs in 2018.
Last Wednesday, Apple’s shares fell amid a Wall Street downturn triggered by the Federal Reserve’s prediction of a more gradual pace of interest rate cuts next year. Nevertheless, investors remain optimistic that broader monetary easing trends will bolster stock markets in 2024.
Sam Stovall, chief investment strategist at CFRA Research, pointed out that technology stocks, including Apple, are increasingly being viewed as a defensive sector due to their earnings growth potential. He indicated that the Fed’s actions might have a lesser impact on technology compared to other cyclical sectors like consumer discretionary and financial services.
Commenting on Apple’s journey toward a $4 trillion (approximately Rs. 3,40,73,552 crore) valuation, Adam Sarhan, CEO of 50 Park Investments, remarked that this achievement underscores Apple’s sustained leadership and innovation within the tech industry.
© Thomson Reuters 2024
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
