Apple's services segment shows strong growth potential with high gross margins in Q1 2025.

From Yahoo Finance: 2025-04-06 10:00:00

Apple (NASDAQ: AAPL) is the world’s most valuable company, with a market cap of nearly $3 trillion. Its sales hit $391 billion in fiscal 2024, 75% from products like iPhone and iPad, 25% from services like Apple Music and iCloud. Services’ sales growth of 15.7% annually outpaces products, with a 75% gross margin in Q1 2025.

Apple’s services segment is a key revenue driver, with a wide range of offerings like Apple Music and Apple Pay. CFO Kevan Parekh highlights increased customer engagement and over a billion paid subscriptions. Services’ 75% gross margin in Q1 2025 dwarfs products’ 39%, showing its potential for boosting profitability.

While Apple’s services segment is growing, iPhone sales slipped by 1% in Q1. Incremental upgrades and economic uncertainty may limit sales growth. With a P/E ratio of 32, 40% higher than the 10-year average, the stock may not be a bargain. Despite its strong brand, Apple’s investment potential may be limited at this time.



Read more at Yahoo Finance: Think You Know Apple? Here’s 1 Lesser-Known Fact You Shouldn’t Overlook.