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

Tech stocks soar but experts predict
regulatory crackdown could cause a crash

One-Minute Read

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?

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.