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AI NOT ONLY DRIVER FOR APPLE, SERVICES SEEN SKYROCKETING: LOOP CAPITAL

AuthorVahid Karaahmetovic
Stock Markets
Published 07/30/2024, 04:45 AM



AI not only driver for Apple, services seen skyrocketing: Loop Capital

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View all comments (2)2


© Reuters.


AAPL
-0.66%


Apple (NASDAQ:AAPL) is scheduled to report fiscal third-quarter earnings after
the bell on Thursday, August 1, with investors likely to be watching for sales
results in the China region and updates related to artificial intelligence (AI).

However, according to Loop Capital, AI isn't the only significant growth driver
for the tech giant; the firm’s analysts also see Apple's Services segment
"skyrocketing."

More concretely, analysts emphasize the importance of Apple Music, Apple TV, and
iCloud, projecting substantial revenue increases for these products in the
coming years.

Apple Music currently generates $9.2 billion in revenue and is expected to grow
further. Similarly, iCloud, which stands at $8 billion, “is primed for massive
growth” driven by AI, Vision Pro, and more data-intensive apps, games, and video
content, analysts noted.

Moreover, Apple TV, with nearly 125 million subscribers, generated just under $1
billion in the past year. According to Loop analysts, the growth opportunity
within this service is “massive.”

“We expect content gains mainly through acquisition to drive the Apple TV
growth,” they noted.

Analysts also highlighted Apple News, which currently commands about $1.3
billion annually, and has an $8 billion total addressable market (TAM).

Overall, Loop Capital’s analysis suggests that by 2030, the TAM for Apple’s
Services could reach $391 billion, out of a total company TAM of $1.659
trillion. For comparison, the current TAM for Apple’s services sits at around
$209 billion.

Still, the iPhone remains a cornerstone of Apple's product lineup, analysts
said.

The upcoming iPhone 16 and 17 cycles are expected to benefit from the
integration of AI, which will push consumers towards new devices as refurbished
and older models will lag in performance.


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here or remove ads.

The firm forecasts Apple’s total revenue to surpass $500 billion in the next 3-4
years, with iPhones accounting for roughly half of this amount.

Beyond the iPhone, Loop Capital also stressed the importance of Apple’s custom
AI chip, which is expected to have “major implications in 2025 and beyond.”

In addition, the investment bank points to the resurgence of other devices like
the Mac and iPad, which are recovering from sales slumps post-pandemic, aided by
new designs and increased integration across Apple’s ecosystem.


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AI not only driver for Apple, services seen skyrocketing: Loop Capital

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