Apple and Microsoft break $4 trillion valuation – prompting AI bubble fears

Apple and Microsoft have each broken the $4 trillion (£3 trillion) valuation mark this week, hitting record stock highs as investor excitement over artificial intelligence (AI) continues to fuel Wall Street’s major stock indexes.

Microsoft and Apple are now the second and third companies, respectively, to reach the $4 trillion milestone, following semiconductor giant Nvidia, currently valued at $4.5 trillion.

The two tech giants have seen their market capitalizations surge in 2025, adding billions of dollars to their already immense size. Microsoft’s shares have climbed 28%, adding roughly $900 billion to its market cap, while Apple’s stock has risen 15%, adding about $459 billion.

Microsoft’s latest jump was spurred by a new deal with OpenAI that is expected to restructure the ChatGPT maker into a public benefit corporation.  Under the agreement, Microsoft is poised to take a stake of about 27% in the entity, valued at $135 billion.

While Microsoft is seen by some as more deserving of its valuation due to higher growth and AI leadership, analysts including IG’s Chris Beauchamp cautioned that regulatory scrutiny and the assumption of continued breakneck growth for OpenAI pose real risks.

Meanwhile, Apple’s rise, which included a 0.4% jump to a record high of $269.87 on Tuesday, is attributed to strong demand for its latest iPhone models, alleviating recent concerns about its slow pace in the AI race.

The massive valuations, however, have intensified fears that the US stock market is entering bubble territory. Despite the frenzy, some investors reject comparisons to the dotcom bubble of the early 2000s, noting that today’s tech leaders, unlike many companies then, generate enormous cash flows.

Last year, Microsoft earned over $95 billion in net income, and Apple earned more than $100 billion.