In a recent op-ed published in Barron's, former sell-side analyst Gene Munster argued that Apple (NASDAQ:AAPL) deserves a "trillion-dollar valuation."

You can read the full op-ed to understand why he believes the stock deserves that valuation, but what I found interesting in the piece were his iPhone unit growth assumptions over the next several years.

Apple's Touch ID sensor decomposed into its various layers.

Image source: Apple.

"We expect iPhone units to be up around 7%, year-over-year, for the iPhone X cycle (fiscal year 2018), and flattish in 2019 and 2020," Munster wrote.

Put another way, Munster expects modest iPhone unit growth driven by this radically redesigned iPhone, followed by a couple of years of iPhone unit shipment stagnation.

Reading Munster's views on this lead me to ask a broader question: Is Apple's iPhone done growing?

Unit growth versus revenue growth

Clearly, one thing that has many excited about the coming iPhone "super-cycle" aside from the potential unit growth is average selling price growth. It's believed that Apple will launch three new iPhones this year: two "standard" models that will directly succeed today's iPhone 7 and iPhone 7 Plus and then a premium iPhone 8 with an OLED display and other unique features to set it apart from its cheaper siblings.

To the extent that customers opt to buy up Apple's product stack, Apple should enjoy increased iPhone average selling prices, which should, in turn, translate into increased revenue.

The idea, then, is that if Apple were to achieve 7% iPhone unit growth in the upcoming product cycle, it should be able to deliver revenue growth better than that.

However, the average selling price bump may possibly be a one-time phenomenon. Thus, it could be a challenge for Apple to drive average selling prices up following this year's iPhone product cycle, meaning that flattish iPhone unit growth in fiscal 2019 and fiscal 2020 would also mean flattish revenue growth.

Are we at peak iPhone?

If Munster's prediction that the iPhone business will see flat unit growth in its fiscal 2019 and fiscal 2020 pans out, then that'd be a clear negative for Apple. The iPhone business represents Apple's largest revenue and profit contributor by a wide margin, and so flattish iPhone unit shipments will make it harder for the company to deliver attractive revenue and profit growth to its stockholders.

Now, the world doesn't end in fiscal year 2020, so presumably there will be opportunities to grow the iPhone business in the years ahead. However, for the trend to change, there needs to be a catalyst to drive that change.

iPhone growth can be achieved in one of the following ways:

  1. The overall smartphone market continues to grow and Apple manages to, at the very least, avoid losing market share; or
  2. The overall smartphone market is at least flat and Apple manages to increase its market share within that market.

Apple doesn't have a lot of control over the dynamics of the overall smartphone market. It can, however, control the products and services that it builds as well as its go-to-market strategy.

If the smartphone market itself has largely peaked, then Apple's best bet will be to try to grab market share in the portions of the market in which it plays (I can't see Apple going after the relatively low-cost smartphone market).

If the smartphone market hasn't peaked, then Apple's job will be to simply make sure that it continues to build attractive products to capture that growth.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.