Apple (AAPL) shares have suffered a double-digit decline since December, and the current AAPL share price is down 3.74% at $125.07. However, the company’s strong services business and plans to enter a new market could make it worth investing in.
Services Business
Apple’s services, which include platforms such as Apple TV+, Fitness+, News+, Music, Arcade, and iCloud, offer attractive profit margins and have seen significant growth in recent years. In fiscal 2022, services revenue increased 14% year-over-year to $78.1 billion, while iPhone revenue rose 7%. Additionally, services reported a 71.7% profit margin, while products had a margin of 36.3%. As Apple transitions its production line out of China, the company’s services segment offers an opportunity to diversify revenue and take pressure off the iPhone segment.
Virtual/Augmented Reality Market
Apple’s (AAPL:NSD) plans to enter the virtual/augmented reality (AR/VR) market with a new headset as soon as 2023 could also be promising for the company’s long-term outlook. The AR market was worth $25.33 billion in 2021 and is expected to reach $160.09 billion by 2027, according to Grand View Research. Apple’s entry into this market could bring in significant revenue and provide an opportunity for the company to diversify further.
Investment Considerations:
While Apple’s reliance on China for iPhone production and its recent stock dip are cause for concern, the company’s services business and plans to enter the AR/VR market offer promising opportunities for long-term growth. However, investors should carefully consider their risk tolerance and investment goals before adding Apple to their portfolio.
