A new report this week says that Apple can once again achieve a $3 trillion market valuation thanks to its strong services and “lifetime value”, rather than products like the iPhone.
AAPl’s market cap briefly touched $3 trillion at the turn of this year. However, it has fallen considerably since in the face of global economic headwinds. According to one analyst, Apple can fight its way back to this milestone, but not because of products like its best iPhones and iPads, but rather thanks to services.
As reported by Bloomberg, comments this week from Morgan Stanley suggest that even though Apple is still viewed by the market as a hardware company, Apple’s new “lifetime value” approach and recurring revenue from services like Apple Music and Apple Arcade could give its share price long-term upside of over $200 (it currently trades at $153), and push it over the $3 trillion line.
Are Apple shares on the up?
The report notes comments from MS analysts including Erik Woodring who stated “the Apple business model is shifting from one that maximizes hardware shipment growth to one that maximizes installed base monetization” and claims Apple’s focus on service revenue and installed user base over iPhone sales numbers is a key testament to this.
The report says that Woodring continues to rate Apple as overweight, thanks in part to a future model that assumes Apple users will spend $2 per day on products and services, something that’s already happening in the U.S.
Apple will unveil its Q3 earnings at a call next week, but even the Cupertino giant isn’t immune to economic pressure. This week it was reported that Apple is planning to cut budget growth and freeze hiring in some departments in 2023 in anticipation of a potential economic downturn.
With the summer at its height, we’re drawing close to Apple’s usual swathe of fall product launches including a new iPhone 14 and Apple Watch Series 8, as well as a haul of new Macs and iPads. Expect these to also play into Apple’s performance.
Game on!
Apple Arcade
Unlimited games, one price
Apple Arcade has over a hundred premium games with more added regularly each week. There is something here for everyone, and it only costs $5 a month for all you can game!
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