Historic! Apple Is Now A Rs 34 Lakh Crore Company; Bigger Than India's Economy?

Apple Inc. is rapidly approaching a historic $4 trillion stock market valuation, fueled by investor optimism surrounding the company's advancements in artificial intelligence (AI). This surge follows significant stock price increases, which have propelled Apple ahead of competitors such as Nvidia (NVDA) and Microsoft (MSFT) in the race to reach this monumental milestone.

Spark Investor Enthusiasm
Since early November, Apple shares have jumped nearly 16 per cent, adding approximately $500 billion to its market capitalization. Analysts point to the company’s ongoing progress in AI as a key factor driving this surge. “Investor enthusiasm for artificial intelligence and an expectation that it will result in a supercycle of iPhone upgrades” have been key to this rally, said Tom Forte, an analyst at Maxim Group, who currently has a “hold” rating on the stock.

Apple Surpasses Market Value
At its most recent close, Apple’s market value stood at around $3.85 trillion, surpassing the combined value of Germany's DAX and Switzerland's SMI indexes. The tech giant, which pioneered the trillion-dollar milestone, is known for its iPhone supercycles, where the release of new iPhone models triggers a surge in consumer upgrades.

Nvidia Leads AI Surge, Apple Follows
Nvidia, a leader in AI-related technology, has seen its stock price soar by more than 800% over the past two years. Meanwhile, Apple’s shares have nearly doubled in the same period, with analysts indicating that while near-term iPhone sales remain subdued, broader AI features and availability could drive demand for the iPhone 16 series starting in 2025.

Modest Revenue Growth
Despite the recent stock surge, Apple has forecasted a modest increase in revenue for its fiscal first quarter, projecting low- to mid-single-digit growth for the holiday season. Analysts are questioning the company’s ability to sustain momentum, especially with iPhone demand still muted. However, Morgan Stanley analyst Erik Woodring believes that as Apple expands its AI capabilities, iPhone demand will likely improve in 2025.

Potential Tariff Risks
Apple may also face challenges if U.S. President-elect Donald Trump follows through on his promise to impose tariffs on Chinese goods. However, analysts like Woodring expect that Apple could secure product exemptions, similar to the first round of China tariffs in 2018. Despite broader economic concerns, such as the Federal Reserve's forecast of slower rate cuts in 2024, technology stocks like Apple are viewed as a “defensive sector” by investors due to their strong earnings growth.