Apple's Services Strategy. Artificial Intelligence. A Valuation

 

Apple is basing its future strategy on the software services applications Apple is offering via iPhones, iPads, Apple Watch, Macintosh computers.

Actually, 200 USD from the sale of every iPhone  is attributed in the income account to services and that is partly how in the last reported quarter Apple's services revenue reached 22.3 billion USD or around 25 % of Apple's 89.50 billion USD revenue in the last reported 3Q2023 quarter.

200 USD from every iPhone price is only part of the reason for the significant services revenue Apple is reporting. The 30 % standard commission Apple takes from App Store software application sales is the predominant reason for Apple's services growth. Apart from that, via the App Store applications a huge data flow of information flows into Apple's Servers. Apple claims it does not track or significantly analyze the data. But the sheer volume of data stored on Apple's servers is a treasure trove and could easily propel Apple into the new leader in Artificial Intelligence, if the data is analyzed efficiently en masse.

Artificial Intelligence is the next both technology and investment frontier, according to many analysts, technologists and investors. If Apple decides to utilize and more actively analyze the treasure trove of information it possesses this could unlock entirely new avenues of revenue and profit growth for Apple Inc.

Apple's intrinsic worth, based partly on the big data it possesses is 5.2 trillion USD, according to Wolfteam Ltd.'s revenue and profitability projections and comparables estimates.

A possible China Taiwan encounter is the dark cloud hanging over Apple. Apple Inc is trying to diversify away that risk by opening iPhone, iPad, Macintosh manufacturing plants in Brazil, India etc., but this is a lengthy process.

All in all, Apple Inc's push into services and the associated gathering of information makes Apple undervalued currently in Wolfteam Ltd.'s view.