Apple reaches $5 trillion market value, but high stock price increases risk for investors

Apple's market capitalization briefly hit $5 trillion on July 28, making it the second company ever to reach that level, but its stock is now trading at a price-to-earnings ratio of 41, its highest in a decade. The high valuation reduces the effectiveness of Apple's massive share buyback program, which previously boosted earnings per share by 4 cents per dollar spent but now only adds 2.4 cents. Analysts warn the stock's multiple is unlikely to stay at 41. Apple's profits rose 25% over the past year, but its share price doubled in the same period, creating a divergence that makes the stock a riskier bet. The company is planning a push into smart home devices.