Key facts
- Apple's market capitalization briefly surpassed $5tn, making it the second company to achieve this valuation.
- The rally in Apple shares occurred amidst a broader sell-off in AI and semiconductor stocks.
- Nvidia was the first company to reach the $5tn valuation mark.
- Concerns over AI companies' borrowing for data center expansion and competition from Chinese chip makers contributed to the sell-off.
- Apple's strategy of holding iPhone prices steady and its decision to avoid the AI spending race have bolstered its demand and valuation.
Apple has become the second company in history to achieve a valuation of $5tn, with its shares reaching a session high of $342.89 on Tuesday. This milestone was reached as investors shifted away from AI and semiconductor stocks amid a broader tech sell-off.
The iPhone maker's rally is attributed to strong product demand and its strategic decision to avoid the costly AI spending race that is impacting rivals. Apple's valuation briefly surpassed that of chip giant Nvidia, which had previously been the first company to breach the $5tn mark in October.
The sell-off in AI and semiconductor stocks intensified globally, driven by concerns over AI companies' borrowing for data center expansion and increasing competition from Chinese manufacturers. US chip stocks, including Intel and AMD, saw declines of over 4%, while the Nasdaq 100 index fell more than 10% from its recent peak. South Korean semiconductor firms SK Hynix and Samsung Electronics also experienced significant drops.
Analysts pointed to China's advancements in deep ultraviolet (DUV) chip-making tools as a potential catalyst for the market's reaction, with some suggesting the sell-off was an overreaction. The strong debut of Chinese memory chip maker CXMT on the Shanghai stock exchange further highlighted China's push for self-sufficiency in AI supply chains.
Apple's decision to maintain iPhone prices while increasing those for MacBooks and iPads has supported demand. The company also launched a leasing program in the US through Klarna, offering predictable monthly payments for its devices. Analysts believe Apple's strategy of focusing on customer experience over infrastructure investment, coupled with its leasing initiative, positions it favorably.