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Apple is on the verge of reaching an unprecedented $4 trillion stock market valuation, buoyed by investor enthusiasm for its advancements in artificial intelligence and expectations of a new wave of iPhone upgrades.

The company’s stock has surged roughly 16% since early November, adding $500 billion to its market capitalization and positioning it ahead of Nvidia and Microsoft in the race to this monumental milestone.

Currently valued at approximately $3.85 trillion, Apple’s market cap eclipses the combined value of the stock markets in Germany and Switzerland.

This marks another significant step for the Silicon Valley giant, which has historically been the first U.S. company to hit previous trillion-dollar milestones, largely driven by its iPhone supercycles.

Despite past criticism for its slow adoption of artificial intelligence compared to rivals like Microsoft, Alphabet, and Meta Platforms, Apple has made strides in integrating AI into its ecosystem. In December, it began incorporating OpenAI’s ChatGPT into its devices, following earlier plans to embed generative AI across its suite of applications.

Investors are optimistic about these developments, anticipating that AI enhancements will reinvigorate iPhone sales.

Analysts at Morgan Stanley expect iPhone revenues to rebound in 2025 as Apple expands the availability of its AI features and enhances geographic accessibility. While near-term iPhone demand remains subdued, experts predict that broader AI adoption will drive an uptick in sales.

Apple’s recent stock rally has pushed its price-to-earnings ratio to 33.5, a near three-year high, surpassing those of Microsoft (31.3) and Nvidia (31.7). However, Warren Buffett’s Berkshire Hathaway, Apple’s largest shareholder, has sold portions of its holdings this year, citing concerns over stretched valuations.

Geopolitical risks also loom. President-elect Donald Trump’s proposed 10% tariffs on Chinese imports could impact Apple’s supply chain, but analysts believe the company may secure exclusions similar to those granted during earlier tariff rounds in 2018.

The broader stock market has experienced volatility following the Federal Reserve’s forecast of slower rate cuts in 2024, but Apple has been relatively resilient. Analysts like Sam Stovall of CFRA Research suggest that technology stocks, including Apple, are increasingly viewed as defensive investments due to their robust earnings growth.

Apple’s approach to the $4 trillion valuation underscores its enduring dominance in the tech sector. “This milestone reinforces Apple’s position as a market leader and innovator,” said Adam Sarhan, CEO of 50 Park Investments.

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