This company’s growth story isn’t over yet. It’s just changing.
There’s no denying that Apple (AAPL 0.36%) is one of the most valuable stocks in the modern market. If you invested $10,000 in this popular tech giant 20 years ago, it would be worth nearly $2.5 million today. The invention of the iPhone is largely an achievement.
But it’s a reasonable argument that Apple’s greatest growth years are in the past. Neither iPhone revenue nor sales of popular smartphones have increased, and the iPhone alone still accounts for about half of the company’s sales and profits. The company’s services division is respectable, but it’s not the growth driver that the iPhone was a few years ago.
Perhaps investors can find better opportunities than this.
But before you put Apple back on the shelf and ultimately forget about it, you might want to think more deeply about the company’s foreseeable future. The tech giant still has some tricks up its sleeve that can help turn shareholders into millionaires.
AI will reignite the sluggish iPhone business
Don’t misread the message. It’s unlikely Apple stock will be able to ride another wave like the one that began in 2007 when the first iPhone was introduced. The iPhone is a once-in-a-generation product and will never be completely replaced as a profit center.
But even if Apple’s stock gains were halved over the next 20 years over the past 20 years, Apple stock would likely outperform most other tickers over that period. The necessary growth drivers are certainly in place.
One of them, of course, is the emergence of artificial intelligence.
It’s clear that Apple has fallen behind the AI party, but it’s probably making up for lost time with better and easier-to-use solutions. Its so-called Apple Intelligence not only turns Siri into a full-fledged digital assistant, but also provides users with powerful generative AI tools such as email summarization, writing tools, photo cleanup, and more. Additionally, this intensive digital work is handled by the device itself, rather than moving these tasks to a cloud platform and then transmitting the information back to the iPhone or iPad in use. This will definitely speed up the use of AI. It could also improve the situation and finally spark investor interest in a technology that was previously just frivolous.
And this necessary demand will eventually come true… at least according to technology market research firm IDC. The report predicts that sales of generative AI-enabled smartphones will reach 234 million units this year, but will explode to 912 million such mobile devices by 2028. Consumers need more time to understand the value of these AI tools.
Infiltrating the data center chip business?
But it’s not just the consumer side of the artificial intelligence revolution that could boost Apple stock in the near future. The company is also moving deeper into the chip manufacturing business.
A few years ago, Apple was content to rely on readily available semiconductors for hardware like the Mac, then the iPhone, and then the iPad. However, over time, the company has been able to request further customization of the silicon, most of which is based on Arm Holdings’ ARM processor architecture. Currently, the company primarily designs its own chips and hires third-party manufacturers to manufacture the chips to its specifications, although the benefits of doing so are clear.
But that’s not what’s interesting about evolution. What’s very interesting is how the company plans to use these semiconductors. Sure, some of this underlying R&D is built into the latest iPhones and iPads, but Apple is actually designing the processors it uses in its AI data centers, and so far there’s been no interest in delving too deeply into it. This suggests that the company is poised to enter areas where it did not previously exist. Inside.
Apple itself has said little on the subject, so take this suggestion with a grain of salt. Of course, the company won’t say much, even if it plans to become a major player in AI data centers. It will only be checked when it is fully ready to start.
However, this much can be said for sure. If Apple wants to go all-in on the artificial intelligence data center industry, it has the technical know-how to make a big splash. Or you could do something adjacent to this business that has less competition and could be even more marketable.
Whatever opportunities arise, what is at stake is a segment of the AI data center market that, according to research firm Lucintel, will grow at an annual rate of 22.5% between now and 2030. It is expected that.
Definitely worth owning
Again, there will be no new iPhones. So there will never be another wave of revenue and profit growth like the one the iPhone sparked for Apple. As the old saying goes, lightning never strikes the same place twice.
But an underappreciated opportunity exists for current and future Apple shareholders. That’s simply different from what has driven this stock so much higher in the recent (and not-so-recent) past. Apple has evolved, and rightly so. In fact, the fact that Apple can and is evolving in an environment where so many companies are unwilling or unable to evolve could help Apple reach its seven-figure savings goal. This supports the argument that there is.
