Apple nears $1trn valuation - but will the new dotcom bubble burst?

Apple is on the brink of becoming the world’s first ever trillion-dollar company despite growing fears that the tech industry could be on the cusp of another dotcom bubble.

The iPhone maker’s market value soared to $950 following the company’s annual software conference, where Apple unveiled a series of new updates “which experts say maintain its grip on users”, reports the Daily Telegraph. Apple shares have now climbed by 18% this year.

Why is Apple so valuable?

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Combined with continued support from Wall Street sage Warren Buffet, CNN Money says that “Apple is benefiting from investor euphoria surrounding the tech sector broadly”.

The MSCI global technology index has reached a record high while technology shares in Europe have hit levels not seen since the dotcom boom in 2001.

Who else is benefiting?

Growth from the “big four” tech firms, Facebook, Apple, Amazon and Alphabet (Google’s parent company), has also driven the Nasdaq to an all-time high, mirroring similar gains by Asian tech giants including Alibaba and Baidu in recent weeks.

One factor driving tech markets appears to be that “despite their ballooning valuations, technology shares have been seen as insulated from fears surrounding trade wars”, says the Telegraph.

Will it last?

CNBC warns that “tech stocks are flashing a warning sign similar to before the dot-com bubble popped”.

“We can never know when the end will come. Still, there are three critical signals to watch for,” says Ruchir Sharma in an article for The New York Times titled, “When will the tech bubble burst?”

First, Sharma says, a regulatory crackdown on tech giants as either monopolies or productivity destroyers “could pop the allure of tech stocks”.

Second is a tightening of monetary policy by central banks.

And third, if tech earnings to start falling short of analyst forecasts, as happened in the heady days of the dotcom boom just before it crashed.