Wearables are easily among the most exciting market opportunities for Apple (NASDAQ:AAPL), with CEO Tim Cook saying the segment is enjoying "explosive growth." Based on Cook's silly habit of measuring revenue relative to the Fortune 500, Apple's wearables revenue is now approximately $18.9 billion. The broader wearables market saw global unit volumes nearly double in the third quarter, according to recent estimates from market researcher IDC.

With 2019 winding down, Apple may have sold $6 billion worth of AirPods throughout the year. That could more than double in 2020.

iPhone 7 and AirPods

Image source: Apple.

Reaching "the top in record time"

In a recent research note to investors, Bernstein analyst Toni Sacconaghi pegged Apple's 2019 AirPods revenue at $6 billion. The analyst believes that AirPods units could more than double to 85 million in 2020, bringing in $15 billion in sales next year. That would represent around 3.5% of Apple's total expected revenue for the year.

The tech giant released second-generation AirPods in March, followed by higher-end $249 AirPods Pro in October. Apple has also launched other hearables under its Beats brand.

However, the flip side of AirPods' incredible popularity and blistering growth is that sales could potentially peak soon. "Growth tends to slow down a lot once you reach the top of the curve, and AirPods are simply growing so fast today that they risk reaching the top in record time," according to Sacconaghi.

There's also a subset of iPhone owners that bought used handsets and may not be willing to spend $159 on a pair of AirPods, in the analyst's view. Apple said earlier this year that the global iPhone installed base had reached 900 million; Sacconaghi believes around 250 million of those iPhones still in use were bought in the secondary market, which could potentially limit AirPods' upside.

"Given AirPods' extraordinarily steep adoption curve and rapid saturation of the iPhone installed base, we see a dramatic deceleration in AirPods revenue growth by 2021 or 22, to single digit growth rates or possibly lower," the analyst wrote.

A second opinion

Contrast Bernstein's estimates with longtime Apple analyst Gene Munster's at Loup Ventures, who recently estimated that AirPods would generate $8.5 billion in revenue in 2019, based on unit volumes of 59.9 million and an average selling price (ASP) of $142. (Munster's ASP estimate is lower than the $159 retail price of AirPods due to wholesale discounts to retailers and distributors.) Munster's model calls for Apple to sell 95.8 million AirPods in 2020 at an ASP of $159, good for $15.2 billion in revenue.

Bernstein reiterated its market perform rating on Apple shares alongside a price target of $250, which is below current levels.