Apple Inc. (Nasdaq: AAPL) set a U.S. record for market value Monday, surpassing the high mark reached by Microsoft Corp. (Nasdaq: MSFT) during the Internet heyday, on optimism the next version of the iPhone will meet strong demand.

Thus Apple is now Wall Street’s all-time MVP – that’s Most Valuable Property.

After a four-month dip, Apple’s stock has hit new highs recently because of optimism around what is believed to be the impending launch of the iPhone 5, and possibly a smaller, cheaper iPad.

Apple has been the world’s most valuable company since the end of last year. It’s now worth 54 percent more than No. 2 Exxon Mobil Corp.

The shares of Cupertino, California-based Apple rose 2.6 percent to $665.15 at the close in New York, for a market value of $623.5 billion. That overtook Microsoft’s $616.3 billion closing market capitalization on Dec. 27, 1999, according to data compiled by S&P Dow Jones Indices LLC.

Apple is preparing to introduce the next version of the iPhone on Sept. 12 in what will be a design overhaul of its top- selling product, two people with knowledge of the company’s plans said last month. The next iPhone “could be the most impactful product upgrade in Apple’s history” and the company will probably sell as many as 250 million units over the life of the device, according to analysts at FBR Capital Markets.

“With the iPhone they have successfully created a strong customer following in an absolutely enormous marketplace,” Toni Sacconaghi, an analyst with Sanford C. Bernstein & Co., said yesterday. “They have captured the hearts and minds of consumers.”

Apple gets about 70 percent of its profit from the iPhone, Sacconaghi said. The company’s stock has risen an average of 11 percent in the two months before previous iPhone updates have been released, he said.

The new iPhone will have a larger screen and thinner body, and is expected to work with faster, long-term evolution wireless networks being introduced by carriers such as Verizon Wireless and AT&T Inc., according to analysts including Piper Jaffray Cos.’ Gene Munster.

Smaller IPad

In addition to the iPhone, Apple also plans to introduce a smaller, cheaper iPad by the end of this year, people familiar with the plans said in July.

Apple, already the world’s most valuable company, has surged more than sevenfold since the iPhone debuted in January 2007. The stock has climbed 64 percent this year.

Because Microsoft’s record was set during the Internet boom, when valuations were inflated by predictions that later failed to materialize, a more significant long-term milestone would be if Apple’s market value tops $1 trillion, David Yoffie, a Harvard Business School professor who has written about Apple, said in an interview yesterday.

“We’re in a period now of much more normalcy, which makes Apple’s accomplishments even more impressive,” Yoffie said.

‘Easily Justified’

While the popularity of the iPhone and iPad make it possible that Apple might surpass that $1 trillion mark, it can be difficult for technology companies to sustain a run of successes like Apple has had over the past decade, he said.

“It doesn’t take much to miss a cycle,” Yoffie said. “Right now this valuation is premised on iPhone 5 and a new smaller iPad coming out, and if these are very good or great products then the valuation will be easily justified. If for any reason they have a hiccup on any of these products, then Apple would be vulnerable.”

PetroChina Co. became the world’s first company to be valued at $1 trillion, when the shares almost tripled on its first day of trading in Shanghai in 2007.

Inflation Adjustment

The comparison to Microsoft does not take inflation into account. In inflation-adjusted dollars, the software giant was worth about $850 billion on Dec. 30, 1999. Microsoft is now worth $257 billion.

Analysts believe Apple’s stock has room to grow. The average price target of 38 analysts polled by FactSet is $745.80.

Despite the surge, Apple’s stock is not particularly expensive compared to its earnings for the last twelve months. The company’s “price-to-earnings ratio” is 15.6, compared with 16.1 for the S&P 500 overall. That suggests investors, unlike analysts, don’t believe the company can grow its profits much from current levels.

Microsoft had a price-to-earnings ratio of 83 at the 1999 peak. The stock was caught up in the Internet mania of the time and investors believed it could boost its future earnings massively.

Figures supplied by FactSet imply Microsoft’s market capitalization record was $619.25 billion, somewhat lower than the $620.58 billion calculated by S&P. The difference lies in the number of outstanding shares the firms ascribe to Microsoft at the time.

By coincidence, the peak price for one Apple share is now less than $2 away from the retail price of the Apple I computer in 1976. It sold for $666.66.

(Bloomberg and The Associated Press contributed to this report.)