Apple Joins the $5 Trillion Club - By Staying Out of the AI Arms Race

Apple has become only the second company ever to hit a $5 trillion market valuation, riding a wave of product demand while deliberately avoiding the AI spending frenzy that's weighing down its biggest rivals. The iPhone maker's shares touched $342.89 on Tuesday before settling near $340, giving it a market cap of roughly $5 trillion. That's just behind Nvidia, which first crossed the threshold last October and remains the only other company to do so.

Apple's run comes as tech investors flee AI and semiconductor stocks amid mounting concerns about the industry's borrowing binge to fund data-center expansion. Chip makers Intel, AMD, and others all fell sharply Tuesday, and the Nasdaq 100 slid into correction territory - down more than 10% since its early June peak. South Korea's SK Hynix and Samsung also dropped over 10% after reports that China had begun mass-producing homegrown chip-making tools, adding to worries about competition and the "circular funding" fueling AI companies. Google's disclosure of negative free cash flow for the first time - burning $5.9 billion in a quarter - only deepened the unease.

Apple, meanwhile, has been shielded by its slower approach to AI. Instead of pouring billions into infrastructure, it relies on Google's technology for services like a revamped Siri. That restraint, along with a decision to hold iPhone prices steady last month, has kept demand strong. On Tuesday, Apple also launched a device leasing program in the U.S. through Klarna, with monthly payments starting at $17.99 for an iPhone. "Apple has resisted the AI spending race, betting that customer experience - not infrastructure investment - will ultimately determine the winners," said Forrester analyst Dipanjan Chatterjee. "The leasing program is a clever response: it replaces sticker shock with a predictable monthly payment."

Apple's stock is up 24% so far this year, far outpacing its Magnificent Seven peers. The company reports fiscal third-quarter earnings Thursday, with analysts projecting revenue growth of more than 15% year over year.

Source: The Guardian