Apple becomes second $5T company as investors flee AI stocks

Apple became the second company to reach a $5 trillion market capitalization, hitting $5.04tn on Tuesday, as investors fled AI and semiconductor stocks amid a broader tech sell-off. The iPhone maker's rally was driven by strong product demand and its decision to avoid the AI spending race that has sapped cash flows at rivals like Google, which reported negative free cash flow for the first time. Analysts attributed the sell-off to concerns over AI investment spending, competition from cheaper Chinese chipmakers, and the "circular funding" within the AI industry.

Apple has become only the second company to pass the $5tn valuation mark, as it benefited from investors fleeing AI and semiconductor stocks amid a wider tech sell-off. The iPhone maker’s shares hit a session high of $342.89 on Tuesday, giving it a market capitalisation of $5.04tn £3.78tn , then eased back down to $340.08 – around the $5tn mark. Apple became the world’s most valuable company https://www.theguardian.com/technology/2026/jul/17/apple-nvidia-most-valuable-company earlier this month, overtaking the chip giant Nvidia, which had been at the top since June 2025 and became the first company to breach the $5tn threshold https://www.theguardian.com/technology/2025/oct/29/nvidia-first-company-5-trillion last October. The US consumer electronics company’s rally has been driven as much by strong demand for its products as its decision to sit out the AI spending race that is sapping cash flows at big tech rivals. Its fresh high valuation came amid an intensifying sell-off of AI stocks around the world https://www.theguardian.com/business/2026/jul/28/ai-sell-off-chip-stocks-sk-hynix-samsung driven by rising concerns about AI companies’ borrowing to fund datacentre expansion. US chip stocks extended their recent losses when Wall Street opened on Tuesday, with Intel, Advanced Micro Devices, Sandisk, Western Digital and Seagate Technology all down by more than 4%. The Nasdaq 100 index of leading tech stocks fell by as much as 1.8% at one point, meaning since its early June record high it had fallen more than 10% – the technical definition of a market correction. Meanwhile South Korea’s stock market slid to its lowest level since mid-April, with semiconductor companies SK Hynix and Samsung Electronics falling by more than 10%. Analysts attributed the sell-off to renewed worries over AI investment spending, and competition from cheaper Chinese companies, after a report by the Information https://www.theinformation.com/articles/china-starts-mass-producing-homegrown-duv-chipmaking-tools-advance-local-chip-industry that China had begun mass production of homegrown deep ultraviolet DUV chip-making tools. Investors may also be growing jittery about the “circular funding” at the heart of the AI industry https://www.theguardian.com/technology/2026/feb/05/disapperance-100bn-deal-ai-circular-economy-funding-nvidia-openai , through which artificial intelligence companies finance one another. They have also been spooked by the announcement from Google last week that it was further increasing capital spending this year to as much as $205bn to fund its AI plans, while reporting negative free cashflow for the first time in its history, burning through $5.9bn in the three months to the end of June. Apple has been shielded somewhat by being something of an AI laggard. Its difficulties in developing in-house models meant it has instead relied on Google’s technology to power new services such as a revamped Siri. That has spared it the hefty infrastructure costs that have left big tech investors wary. Apple’s decision to hold iPhone prices steady last month when it announced increases for MacBooks and iPads https://www.theguardian.com/technology/2026/jun/25/apple-price-hike has also bolstered demand as buyers scooped up the company’s flagship device before expected price hikes later this year, analysts have said. To aid demand, Apple on Tuesday also launched a device leasing programme in the US through the payments firm Klarna, under which monthly payments start at $17.99 for an iPhone, $11.99 for an Apple Watch or iPad, and $24.99 for a Mac. “Apple has resisted the AI spending race, betting that customer experience – not infrastructure investment – will ultimately determine the winners,” said Dipanjan Chatterjee, a vice-president and principal analyst at Forrester. “The new leasing programme is a clever response: it doesn’t reduce the price of an iPhone, but it changes how consumers perceive the cost by replacing sticker shock with a predictable monthly payment.” Including session gains, Apple stock has jumped 24% so far this year, widely outperforming the other six of the “Magnificent Seven” cohort of US technology stocks. Apple is to report its third-quarter earnings after the market close on Thursday, with analysts expecting a more than 15% jump in revenue for the period compared with a year earlier. Reuters contributed to this report