After a rough few months, Apple has proven to Wall Street analysts that it does know what it’s doing and that it is definitely moving beyond dependency on the iPhone as the sole driver of revenue. After yesterday’s Q2 2019 earnings call, the company jumped in after-hours trading, and investors have been scooping up shares of AAPL since the ring of the bell this morning. Apple shares closed up 4.91% at $210.52 per share, leaving the company’s market capitalization at $992.66 billion. Sadly, it closed under the trillion dollar mark, having exceeded that level for most of the trading day.
What caused the big turnaround? In a word, services. Apple’s services business is based on subscriptions to services like iCloud, Apple Music, the App Stores, and subscriptions to third-party apps. A surprising number of users still don’t take advantage of many of the services provided by Apple, meaning that there is plenty of room for growth in the future — particularly with Apple’s magazine and TV services about to come on line.
Service revenues reached an all time high of $11.5 billion for the quarter, which was more than Mac and iPad revenues combined. Wearables (Apple Watch, AirPods, Beats) are another very bright spot, with revenue up nearly 50% year over year. Apple’s wearables business is now the size of a Fortune 200 company alone!
This doesn’t mean that something isn’t going to slow down the fast-moving Apple revenue train in the future, but for the time being, the company’s fortunes are looking bright again.