The tech giant has outpaced Nvidia and Microsoft in this race, experiencing a roughly 16% increase in its stock price since early November, which has contributed approximately $500 billion to its market capitalization.
According to Tom Forte, an analyst at Maxim Group with a "hold" rating, the recent surge in Apple shares is indicative of "investor enthusiasm for artificial intelligence and the expectation of a supercycle in iPhone upgrades."
As of the last market close, Apple's valuation stood at around $3.85 trillion, significantly surpassing the combined market value of Germany and Switzerland's leading stock exchanges.
Historically, the Silicon Valley company has been propelled by iPhone supercycles and was the first U.S. firm to achieve previous trillion-dollar valuations.
In recent years, Apple has faced criticism for its slow approach to developing an artificial intelligence strategy, while competitors like Microsoft, Alphabet, Amazon, and Meta Platforms have taken the lead in this emerging field.
Nvidia, the largest beneficiary of the AI boom, has seen its shares soar over 800% in the last two years, while Apple's stock has nearly doubled in the same timeframe.
Earlier this month, Apple began incorporating OpenAI's ChatGPT into its devices, following its announcement in June to integrate generative AI technology across its application suite.
The company anticipates a modest revenue growth forecast of "low- to mid-single digits" for its fiscal first quarter, raising questions about the sales momentum for the upcoming iPhone 16 series. However, LSEG data indicates that analysts expect a rebound in iPhone revenue by 2025.
"Although near-term iPhone demand is still muted ... it is a function of limited Apple Intelligence features and geographic availability, and as both broaden, it will help to drive an improvement in iPhone demand," Morgan Stanley analyst Erik Woodring said in a note, reiterating Apple as the brokerage's "top pick" heading into 2025.
The recent increase in stock prices has elevated Apple's price-to-earnings ratio to a nearly three-year peak of 33.5, in contrast to Microsoft's 31.3 and Nvidia's 31.7, as reported by LSEG data.
This year, Warren Buffett's Berkshire Hathaway has divested some of its Apple shares, which is its largest investment, as the conglomerate has generally moved away from equities due to concerns about inflated valuations.
"I suspect the stock in three years will not look as expensive as it does today," said Eric Clark, portfolio manager of the Rational Dynamic Brands Fund, which holds Apple shares.
Apple may encounter retaliatory tariffs if U.S. President-elect Donald Trump follows through on his commitment to impose at least a 10% tariff on imports from China.
"We anticipate that Apple will likely receive exclusions for products such as the iPhone, Mac, and iPad, akin to the initial round of tariffs on China in 2018," Woodring noted.
Last Wednesday, Apple's shares fell sharply during a broader selloff on Wall Street after the Federal Reserve indicated a slower pace of interest rate cuts for the upcoming year; however, investors remain optimistic that the overall trend of monetary easing will bolster stock markets in the next year.
"Technology has been regarded by investors as a new form of a defensive sector because of their earnings growth," said Sam Stovall, chief investment strategist at CFRA Research.
The Fed's decisions "may have a more significant effect on other cyclical sectors like consumer discretionary and financials, while technology may be less impacted."
"Apple's journey towards a $4 trillion market capitalization underscores its lasting supremacy in the technology sector. This achievement solidifies Apple's status as a leader and innovator in the market," commented Adam Sarhan, CEO of 50 Park Investments.