Apple (AAPL) Last Update 11/10/23
% of Stock Price
Revenue
Gross Profits
Free Cash Flow
Apple
STOCK PRICE
DIVISION
% of STOCK PRICE
iPhone
43.4%
$77
Services
30.4%
$54
Mac
6.2%
$11
iPad
6.1%
$11
TOTAL
100%
$178
$178.18
Yours
Trefis Price
N/A
$180
Market
 
Top Drivers for Period
Key Drivers
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TREFIS Analysis


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RECENT NEWS AND ANALYSIS

Potential upside & downside to trefis price

Apple Company

VALUATION HIGHLIGHTS

  1. iPhone constitutes 43% of the Trefis price estimate for Apple's stock.
  2. Services constitute 30% of the Trefis price estimate for Apple's stock.
  3. Apple Watch,TV&Accessories constitute 12% of the Trefis price estimate for Apple's stock.

WHAT HAS CHANGED?

Apple's Q3 FY'23 earnings

Apple posted a better-than-expected set of Q4 FY'23 results. Revenues came in line ahead of expectations at $89.50 billion, although it marked a slight decline versus last year. Earnings came in at $1.46 per share. Although Apple's core computing products including the iPhone, iPad, and Mac saw revenue decline year-over-year, the services business fared a bit better than expected.

Launch of iPhone 15

Apple released its new iPhone 15 devices at a special event on September 12. The flagship Pro and Pro Max models are now built with titanium casings and offer the usual imaging and processing power upgrades. The basic iPhone 15 and 15 Plus models have largely similar designs to last year. However, they offer better processors, and cameras and sport the dynamic island notifications system, which was previously limited to the Pro. The iPhone 15 starts at the same $800 as last year, while the Pro model begins at $1,000 - marking the seventh consecutive year Apple has held on to the price point for its flagships. However, Apple raised the entry price for the Pro Max to $1,200, while doubling storage capacity.

Note: Apple's FY'22 ended on September 24, 2022. Q3 FY'23 ended on July 1, 2023

Launch of the Vision Pro headset

Apple unveiled its mixed-reality headset called the Vision Pro in early June, during its annual worldwide developer conference (WWDC). The device is priced starting at $3,499 and combines virtual reality - used for games and experiences - with augmented reality, which overlays digital information in the real world using cameras.

Although the use cases of the device beyond content consumption remain somewhat unclear at the moment, Apple has a knack for working with developers and building a software ecosystem around its products.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Apple's value that present opportunities for upside or downside to the current Trefis price estimate for Apple:

iPhone revenues And margins post improvements

  • iPhone Revenue and Gross Margin:
    We estimate that Apple's iPhone revenues will improve slightly from $ 205 billion in FY'22 to around $225 billion by FY'29. However, if the company can improve its iPhone revenues to around $250 billion by the end of our review period, with gross margins rising to about 45% from our current forecast of 43.5%, there could be an upside of about 10% to our price estimate.

For additional details, select a driver above, or a division from the interactive Trefis split for Apple at the top of the page.

BUSINESS SUMMARY

Apple makes money primarily by selling mobile phones, computers, and tablets to consumers worldwide. Apple's well-known consumer products include the iPhone, Mac, iPad, and Apple Watch. In addition to selling hardware, Apple makes money from services that include the App Store, Apple Music, and iCloud.

SOURCES OF VALUE

We believe the iPhone segment is more valuable than the Mac and iPad segments due to the following:

Large mobile phone market

The smartphone market is significantly larger than the tablet market, and margins in the smartphone business are also likely to be higher. About 1.2 billion smartphones were shipped globally in 2022.

KEY TRENDS

Mac Gains Traction

Apple's Mac computers have gained market share due to their superior product differentiation, proprietary Mac OS software and applications, new M-Series processors, and premium build quality. Apple has also been benefiting from the fact that it plays in the high end of the PC market – typically focusing on the lucrative $1,000+ price points – rather than the commoditized low and mid-range where a bulk of the volumes come from. Over FY'22, Mac Revenues reached an all-time high of $40 billion, although we do expect to see a slowdown over 2023.

Services Present A Growth Opportunity

Apple's Services business has grown by over 21% between FY'17 and FY'22, eclipsing the iPad and Mac to become the company's second-largest business segment with revenues of about $78 billion in FY'22. While the App Store remains the primary driver of growth, services such as Apple Music and Apple TV+ are also gaining traction. Apple's base of paid subscriptions on its platform has also been rising steadily, with over 900 million active subscriptions at the end of September 2022.