Apple becomes second $5T company as AI sell-off reshapes tech

Apple's stock reached $342.89 on Tuesday, July 28, pushing its market capitalisation to $5.04 trillion and making it only the second company ever to cross the $5 trillion threshold, after Nvidia, which achieved the milestone in October 2025. The milestone caps a week in which Apple reclaimed the title of world's most valuable company from Nvidia, which had held the top position since June 2025.

Apple's valuation surge reflects investor flight from AI and semiconductor stocks amid a broader tech market correction. The Nasdaq 100 fell as much as 1.8%, marking a decline of more than 10% since its early June peak. Chip stocks including Intel, Advanced Micro Devices, SanDisk, Western Digital, and Seagate Technology each fell more than 4%. South Korea's stock market hit its lowest level since mid-April, with SK Hynix and Samsung Electronics declining more than 10%. Analysts attributed the sell-off to concerns about AI companies' heavy infrastructure spending, competition from cheaper Chinese chip-making tools, and worries about circular funding within the AI industry. Google's announcement that it would increase capital spending to as much as $205 billion this year while reporting negative free cash flow for the first time intensified investor concerns.

Apple has benefited from its relative distance from the AI spending race. Rather than building in-house AI models, Apple partnered with Google to power services like a revamped Siri, sparing it the substantial infrastructure costs that have burdened other tech giants. The company's stock has jumped 24% year-to-date, significantly outperforming other Magnificent Seven stocks. Apple's decision to hold iPhone prices steady while increasing prices for MacBooks and iPads has also bolstered demand, as consumers rushed to purchase iPhones before expected price increases later this year. On Tuesday, Apple launched a device leasing programme in the US through Klarna, with monthly payments starting at $17.99 for an iPhone.

Apple is expected to report third-quarter earnings on Thursday, July 30, with Wall Street analysts forecasting revenue of $108.85 billion and earnings per share of $1.89, representing growth of approximately 15% and 20% respectively year-over-year. iPhone revenue is projected at $53.6 billion, while services revenue is anticipated to reach $31.36 billion. These results will mark the final earnings report under CEO Tim Cook, who is transitioning to executive chairman in August. His successor, John Ternus, will assume the CEO role.

Despite Apple's strong performance, the company faces headwinds. Rising memory and storage costs due to the global AI build-out have forced price increases on Macs and iPads. Analysts warn that further memory cost increases in the second half of 2026 could pressure iPhone gross margins from 38% to as low as 34.5% if the company raises iPhone prices. Some investors worry that future iPhone price increases could slow unit growth and ultimately impact services revenue growth.