Apple's total market capitalization is on the verge of hitting $4 trillion, with analysts forecasting a significant boost driven by the company's expansion into generative AI. This growth is further supported by the strong performance of Apple's Services division.
The Role of Apple Intelligence
The iPhone 16 series, while not featuring major design changes, has been met with anticipation due to the inclusion of Apple Intelligence features. Analysts, including Morgan Stanley's Erik Woodring, believe that the full deployment of Apple Intelligence will trigger an iPhone supercycle. However, current demand is considered soft due to the limited capabilities and availability of these AI features.
Apple's Growth in China
Apple faces challenges in China due to regulatory hurdles surrounding generative AI. The company is reportedly in discussions with Tencent and ByteDance to overcome these obstacles. China is a critical market for Apple, contributing significantly to iPhone revenue.
The Power of Services
Apple's Services division is playing a vital role in the company's financial growth, consistently demonstrating quarter-over-quarter revenue increases. Analysts predict that Services could generate $100 billion in revenue in 2025, accounting for 25% of Apple's total revenue. Wedbush analysts estimate that the Services division will reach a valuation of $1.5 to $1.6 trillion by the end of 2024.
Future Outlook
The rollout of Apple Intelligence features has been gradual, and there is a possibility that features for iOS 19 may be delayed until 2026 due to the increased workload on developers. While the potential of generative AI to spark an iPhone supercycle is not yet confirmed, the company's progress will be closely monitored.
