Morgan Stanley projects Apple’s Services revenue to grow to $100 billion by 2023

“Apple’s Services revenue is projected to grow to $100 billion by 2023 according to a recent report by Morgan Stanley analyst Katy Huberty,” Bluesea Research writes for Seeking Alpha. “Apple has reported $37 billion revenue in this segment in FY18. Tim Cook had set a target of doubling Services revenue from 2016 base by end of 2020. Apple will most likely reach this target sooner than estimated.”

“This should be bullish for the stock considering that Apple’s management will stop giving unit sales data and is trying to move Wall Street’s focus to Services instead of products,” Bluesea Research writes. “Currently, [the] Services segment makes only 14% of the total revenue base. As Apple diverts more resources to streaming content and new services, we should see the revenue share of this segment increase significantly.”

Despite nearly flat unit sales, “the overall user base of the company is still growing at a healthy pace. Tim Cook mentioned in the earnings that the company is seeing double-digit growth within installed base,” Bluesea Research writes. “One of the reasons behind stagnant unit sales and growth in installed base is that Apple devices enjoy a good resale value. Hence, the overall usage of the device increases substantially even if the new purchases are lower. Apple should be able to use this positive tailwind to build better Services growth…”

Read more in the full article here.

MacDailyNews Take: “Bu, bu, but UNIT SALES!” bleat the Wall Street analyst sheep. “We need our unit sales that no other tech company provides or has ever provided! Those unit sales are worth $300 billion in market value, dontcha know?!”


Whatever. We’ll gladly accept a nice AAPL discount sale that benefits not only smart investors but Apple’s buyback program as well. Tim Cook et al. are wise to clam up and let the manipulators and fools speciously talk down the stock in their fact-free echo chamber as loudly as possible before Apple reports all-time record holiday quarter earnings in January.

Eventually, the so-called analysts will wise up. As we all know, they’re always well behind the curve.

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  1. The only thing big investors ever care about is iPhone sales. And those sales had better start increasing. Most analysts and other talking heads say that Apple’s Services will be worthless unless increased iPhone sales go hand-in-hand. Forget used iPhones and the current user base. Jim Cramer was wasting his breath trying to convince fellow talking heads that Apple should have a higher P/E value than Clorox but that fell on deaf ears. Most analysts believe that without increased iPhone sales, Apple is finished as a company. As a shareholder, I find that rather discouraging. They even said that without more innovation, no one will be buying iPhones at those higher prices. Apple shareholders are facing a double-whammy as there are very few remaining believers in Apple.

    I honestly don’t know what’s going to happen next quarterly report when the obsessive-compulsive investors don’t hear how many iPhones were sold. I’m definitely concerned about how their reaction will affect Apple stock. No one seems to ever believe what Tim Cook says so he might as well not say anything.

  2. Apple’s services business did $38B in FY 2018, so $100B by 2023 represents a 21% annual growth rate. Conservatively estimating that Apple’s services made $12B in profit in FY 2018 and assuming an earnings multiple of 40x on this profit (same as Google and Microsoft), Apple’s services business alone is worth $480B. So does that mean that the rest of Apple is only worth $400B or are Apple shares shamefully undervalued?

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