Apple (AAPL.O) is closing in on a historic $4 trillion stock market valuation, powered by investors cheering progress in the company’s long-awaited AI enhancements to rejuvenate sluggish iPhone sales.

The company has pulled ahead of Nvidia (NVDA.O) and Microsoft (MSFT.O) in the race to the monumental milestone, thanks to an about 16% jump in shares since early November that has added about $500 billion to its market capitalization.

The latest rally in Apple shares reflects “investor enthusiasm for artificial intelligence and an expectation that it will result in a supercycle of iPhone upgrades,” said Tom Forte, an analyst at Maxim Group, who has a “hold” rating.

Valued at about $3.85 trillion as of the last close, Apple dwarfs the combined value of Germany (.GDAXI) and Switzerland’s (.SSMI) main stock markets.

The Silicon Valley firm, driven by the so-called iPhone supercycles, was the first U.S. company to hit previous trillion-dollar milestones.

In recent years, the company has attracted criticism for being slow to map out its artificial intelligence strategy, while Microsoft, Alphabet, Amazon and Meta Platforms have pulled ahead to dominate the emerging technology.

Shares of Nvidia, the biggest AI beneficiary, have surged more than 800% over the past two years, compared to the near doubling in shares of Apple during the same period.

Apple earlier in December started integrating OpenAI’s ChatGPT into its devices after unveiling plans in June to integrate generative AI technology across its app suite.

He’s assisted by the wearable exoskeleton robot he helped develop.

The company expects overall revenue to increase “low- to mid-single digits” during its fiscal first quarter – a modest growth forecast for the holiday shopping season – sparking questions about the momentum for the iPhone 16 series.

However, LSEG data showed analysts expect revenue from iPhones to rebound in 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 surge in shares has pushed Apple’s price-to-earnings ratio to a near three-year high of 33.5, compared to 31.3 for Microsoft and 31.7 for Nvidia, according to LSEG data.

Warren Buffett’s Berkshire Hathaway (BRKa.N) has sold shares of Apple – its top holding – this year, as the conglomerate broadly retreated from equities on concerns over stretched 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 faces the risk of retaliatory tariffs if U.S. President-elect Donald Trump delivers on his promise to slap tariffs of at least 10% on goods coming from China.

“We believe it’s likely Apple gets exclusions on products like iPhone, Mac and iPad, similar to the first round of China tariffs in 2018,” Woodring said.

Apple’s shares tumbled last Wednesday amid a Wall Street selloff after the Federal Reserve forecast a slower pace of rate cuts next year but investors expect the broad trend of monetary easing to support stock markets 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 action “could end up having a greater impact on some of the other cyclical areas such as consumer discretionary and financials and less so on technology.”

“Apple’s approach to $4 trillion market cap is a testament to its enduring dominance in the tech sector. This milestone reinforces Apple’s position as a market leader and innovator,” said Adam Sarhan, chief executive officer of 50 Park Investments.

Alphabet’s (GOOGL.O) Google’s proposed changes to its search results to comply with EU tech legislation has received the thumbs up from lobbying group Airlines for Europe whose members include Air France KLM and Lufthansa (LHAG.DE).

Google has announced a series of changes in search result formats in recent months following conflicting demands from price-comparison sites, hotels, airlines and small retailers, with the latest tweaks announced last month.

It is trying to comply with the Digital Markets Act (DMA), which prohibits it from favouring its own products and services on its platform or risk fines as much as 10% of its global annual turnover.

“In the spirit of finding a DMA-compliant solution in a timely fashion, the airline industry has shown it is willing to compromise,” Airlines for Europe said in a letter to the European Commission dated Dec. 20 and seen by Reuters.

The airline group expressed support for the horizontal layout for same sized boxes for airlines and comparison sites in search results as well as the colour blue to distinguish them from other elements.

But it said prices displayed in search results should be the same in the graphic as those in the boxes. It also expressed concerns about Google’s proposal for a purely indicative date rather than specific dates for consumers looking to book flights.

Countries negotiating a global treaty to curb plastic pollution failed to reach agreement on Monday.

“Characteristics such as dates are an integral part of the general search process of consumers looking for air travel and the switch to a purely indicative date will downgrade their experience significantly,” the group.

Google has said it may return to an old format of 10 blue links in search results that it used years ago if its rivals – such as airlines and price comparison sites – cannot agree on its proposals to comply with the DMA and not promote its own products.

A US judge ruled on Friday in favor of Meta Platforms’ WhatsApp in a lawsuit accusing Israel’s NSO Group of exploiting a bug in the messaging app to install spy software allowing unauthorized surveillance.

US District Judge Phyllis Hamilton in Oakland, California, granted a motion by WhatsApp and found NSO liable for hacking and breach of contract.

The case will now proceed to a trial only on the issue of damages, Hamilton said. NSO Group did not immediately respond to an emailed request for comment.

Will Cathcart, the head of WhatsApp, said the ruling is a win for privacy.
“We spent five years presenting our case because we firmly believe that spyware companies could not hide behind immunity or avoid accountability for their unlawful actions,” Cathcart said in a social media post.

“Surveillance companies should be on notice that illegal spying will not be tolerated.”

“We’re proud to have stood up against NSO and thankful to the many organizations that were supportive of this case. WhatsApp will never stop working to protect people’s private communication”, he said.

Cybersecurity experts welcomed the judgment.

John Scott-Railton, a senior researcher with Canadian internet watchdog Citizen Lab — which first brought to light NSO’s Pegasus spyware in 2016 — called the judgment a landmark ruling with “huge implications for the spyware industry.”

“The entire industry has hidden behind the claim that whatever their customers do with their hacking tools, it’s not their responsibility,” he said in an instant message. “Today’s ruling makes it clear that NSO Group is in fact responsible for breaking numerous laws.”

WhatsApp in 2019 sued NSO seeking an injunction and damages, accusing it of accessing WhatsApp servers without permission six months earlier to install the Pegasus software on victims’ mobile devices. The lawsuit alleged the intrusion allowed the surveillance of 1,400 people, including journalists, human rights activists and dissidents.

NSO had argued that Pegasus helps law enforcement and intelligence agencies fight crime and protect national security and that its technology is intended to help catch terrorists, pedophiles and hardened criminals.

NSO appealed a trial judge’s 2020 refusal to award it “conduct-based immunity,” a common law doctrine protecting foreign officials acting in their official capacity.

Upholding that ruling in 2021, the San Francisco-based 9th U.S. Circuit Court of Appeals called it an “easy case” because NSO’s mere licensing of Pegasus and offering technical support did not shield it from liability under a federal law called the Foreign Sovereign Immunities Act, which took precedence over common law.

The U.S. Supreme Court last year turned away NSO’s appeal of the lower court’s decision, allowing the lawsuit to proceed.