If you think “what goes up, must come down” applies to Apple stock, think again. The company has beat expectations time and again. And our Apple stock forecast for 2025 predicts more of the same.
You can see a 122% rise from its March 2020 plateau. Cathie Wood’s Ark Invest thought it would take its profits, selling 500,000 shares of Apple in March. But we’re looking for more growth potential.
The company continues to innovate and move closer to its vision of an all-Apple household with phones, computers, watches, health tools, and more. On the horizon, we even expect the company to dish out a car at some point.
There is always some mystery to whatever Apple will do next. But one thing is certain: Something bigger is always coming down the pike.
The last five years show a gain of 408% for holders of Apple stock. Between 2016 and 2020, the company’s annual net income climbed from $45.7 billion to $57.4 billion. That was on revenue of $215.4 billion and $274.5 billion, respectively.
If the next five years look anything like the last five, you will want to be there.
Apple Stock Price Prediction for 2025
Apple’s first 2021 earnings report showed revenue up 21% year over year. It was an all-time quarterly record of $111.4 billion for the company. With that came $1.70 earnings per share, up 35% year over year.
Of course, the holiday season played a big role here. The iPhone was as hot as ever, selling between 75 million and 80 million, another record.
iPhones are only getting bigger. Now, we look forward to the iPhone 12, which will be among Apple’s first 5G devices. With that, the company hopes to set new records in 2021.
The iPhone made half of the revenue for Apple in 2020. But in addition to phones and computers, another Apple segment has started shining brighter with each year. That is Apple’s services sector. In fact, CNBC said it accounted for as much as half of the company’s total value.
Apple wants to hook more people into its brand through services like Apple Music and Apple TV+. Apple TV+ still struggles to gain subscribers, while Apple Music still can’t measure up to the extensive Spotify Technology SA (NYSE: SPOT) catalogue of 50 million songs and counting.
However, the iPhone has proven a super-successful gateway into these services. So, it’s reasonable to expect these services to gain users as Apple hardware sales spike again.
All you need is to zoom out and look at Apple’s services as a whole to see this happening. Apple Pay, Apple Arcade, and more have given Apple services over 600 million subscribers. The ecosystem just keeps growing.
This is one of the main reasons our Apple stock forecast stays bullish. Sales keep going up, and the profits are piling up.
Over the last five years, Apple had earnings per share (EPS) growth of 8.2% per year. For 2021, the company expects $5.11 EPS. Assuming its average earnings growth stays the same until 2025, the company will hit $7 EPS.
At the current price/earnings ratio (P/E) of 28, $7 EPS puts the stock at $200 per share.
But it could go much higher.
You see, Apple appears grow into a fiercer competitor with time. No tech rival is safe.
What Stands in the Way of Apple Stock
When several big fish share a pond, they’re bound to butt heads. You’re probably aware that the App Store sells apps from other companies whose services overlap with Apple. We already mentioned Spotify was one of those.
Over the last few years, Spotify and Apple have fought about Apple’s handling of its App Store. Spotify doesn’t like that iPhone users must go through Apple to subscribe to its service – where Apple gets a 30% cut.
In turn, Spotify has tried to update its app, and the updates have been rejected by Apple.
Spotify is ultimately conflicted, because it wants to be on all Apple devices, but it doesn’t want to pay the price for it. Hence, the company has made marketing and legal efforts to change Apple’s policies.
It’s not the only company that doesn’t like Apple’s policies, either. Apple just finished a trial against Epic Games over a similar issue, with a verdict expected later in the year.
Netflix Inc. (NASDAQ: NFLX) has also engaged in this battle with the company. For them, it’s more of a “cold war.” For a while, Netflix quietly paid the 30% to Apple, and its app was the No. 1 most-featured app in the app store for a long time.
That changed ahead of the 2019 release of Apple TV+. Netflix and Apple were about to be direct competitors.
In January that year, Netflix began funneling new user subscription fees through the web instead of in-app purchases. Apple lost around $5 million in quarterly revenue as a result. Soon, Netflix ceased to be featured in the App Store.
Now, the underlying question here is: Whose pond is it? The more third-party services exist, the more potential friction Apple could face down the road. But they all want to be on Apple devices, which poses a massive “catch-22” for those third parties.
It’s clear that all of Apple’s efforts ultimately point to roping users into their own services, whether it be music, movies, news or anything else. Companies like Spotify, and now apparently the European Union, want to unmask these intentions with anti-trust lawsuits.
At the end of the day, Apple does provide the infrastructure for these third parties to get their product out. And that infrastructure sells like wildfire, as we mentioned before. The more it sells, the more likely companies such as Spotify and Netflix are to work amicably on Apple’s terms.
That’s why, with the iPhone 12 on the way, along with new Mac computers, AirPods, and Apple Watches, it still looks like Apple carries most of the bargaining chips. So, the outlook stays incredibly positive.
And if you needed more to look forward to for Apple stock in 2025, check this out. After years of waiting, some of its craziest hi-tech stuff waits around the corner.
Here’s What Could Make Apple Crush Our Forecast
Apple expects to release an AR headset in 2022 called Apple Glass. Like all of Apple’s other products, it will see ergonomic innovations in the following years – a lighter pair of AR goggles is expected for 2023.
Apple will face tough competition from other tech giants in this field. Microsoft’s HoloLens has become a big hit even with the federal government lately – the Department of Defense made a hefty $21.8 billion order to help train the military.
Hololens was the first real success in the augmented reality department. Google Glass was a complete flop, and other companies, including Apple, are quiet about these nascent projects.
It’s typical of Apple to wait and let a company like Microsoft test the waters for a novel product. The company has done this with almost every piece of hardware it’s ever released, simply improving on the first-mover’s technology. With enough time in research and development, there is no reason to think Apple won’t come out with a killer AR system.
Our very own David Zeiler sees Apple Glass fueling an Apple stock run to $200 as soon as 2022. That’s a solid 60% target from today’s $125.
Of course, even that could be conservative. Big picture, Apple Glass is one of many things going for Apple…
Our Conclusion About Apple Stock
All while “experts” called for slower iPhone sales, they have gone up.
While tech rivals complained about App Store rules, Apple broke further into their industry.
Apple simply will not slow down its product development enough for other companies to catch their breath.
It’s making new lifestyle products. And yes, it’s still ready to penetrate the healthcare industry.
Then you have the Apple Car.
We’ve watched EV stocks rise and fall like dominoes in a few months’ time. In the next five years, we will likely have more information on Apple’s plans for the industry. That could bolster the stock price even further.
We do know that Apple is making a driverless EV and has communicated with companies like Kia Motors about potential manufacturing. The car could come as early as 2024 and would really strike a blow to other tech giants who want to build competing ecosystems.
Apple stock will continue to reward investors. Get some while you can.
— Mike Stenger
Source: Money Morning