Evercore ISI projects that Apple's Services segment could help the company generate $13 in earnings per share [1].
This projection highlights a strategic shift for the company as it moves away from a primary reliance on hardware sales. By leveraging a high-margin ecosystem, Apple can create more consistent revenue streams that are less dependent on the annual release cycle of new devices.
The investment firm based its analysis on the continued expansion of the Services business. This global segment includes the App Store, iCloud, and Apple Music, all of which contribute to a recurring revenue model that scales with the existing user base.
According to the analysis, the Services segment generated over $30 billion in revenue in the most recent quarter [2]. This financial performance underscores the ability of the ecosystem to drive overall corporate growth even when hardware demand fluctuates.
Evercore ISI said the high-margin nature of these services allows a larger percentage of revenue to flow directly to the bottom line. This efficiency is a primary driver behind the target earnings per share of $13 [1].
The analysis, originally published in September 2024, suggests that the company is successfully diversifying its income. As more users integrate into the ecosystem, the potential for increased earnings per share grows—provided the company maintains its current growth trajectory in the services sector.
“Apple's Services segment could help the company generate $13 in earnings per share”
This projection indicates a valuation shift for Apple, moving from a hardware-centric company to a services-oriented powerhouse. If the company achieves $13 EPS through services, it proves that the 'ecosystem lock-in' strategy is effectively offsetting the saturation of the global smartphone market.
