Apple is approaching a record-breaking $4 trillion market valuation, buoyed by investor confidence in the company’s advancements in artificial intelligence, aimed at reinvigorating slowing iPhone sales. With a 16% surge in shares since early November, Apple has added approximately $500 billion to its market cap, surpassing competitors Nvidia and Microsoft in the race toward this historic milestone.

The rally reflects “investor enthusiasm for artificial intelligence and an expectation that it will result in a supercycle of iPhone upgrades,” according to Tom Forte, an analyst at Maxim Group. Currently valued at $3.85 trillion, Apple’s worth outstrips the combined market values of Germany and Switzerland’s stock markets. The company was the first U.S. firm to achieve previous trillion-dollar milestones, driven largely by the so-called iPhone supercycles.

Apple’s AI strategy has faced criticism in recent years for lagging behind industry giants like Microsoft, Alphabet, Amazon, and Meta Platforms. While Nvidia shares have soared over 800% in the past two years, Apple’s stock has nearly doubled in the same period. However, Apple’s recent move to integrate OpenAI’s ChatGPT into its devices and introduce generative AI technology across its app ecosystem signals a significant shift.

Despite expectations of modest revenue growth for the holiday season, with overall revenue projected to increase in the “low- to mid-single digits” in the fiscal first quarter, analysts anticipate iPhone sales will rebound by 2025. This optimism aligns with Apple’s soaring valuation metrics, with a price-to-earnings ratio hitting a three-year high of 33.5, higher than Microsoft’s 31.3 and Nvidia’s 31.7.

Challenges remain, including the risk of retaliatory tariffs if President-elect Donald Trump follows through on plans to impose a 10% levy on Chinese imports. Additionally, Apple shares recently dipped following a Federal Reserve forecast of slower rate cuts in 2025, contributing to broader market volatility.

Despite these risks, investor confidence in Apple’s AI potential and its broader technological advancements suggests a strong position heading into the next year.