With a market cap that has reached as high as $2.5 trillion in recent weeks, it might seem like Apple's (AAPL -0.92%) growth potential is limited. But one of our experts thinks there could be more room to climb, and that was before we learned about Apple's plans to make a car.
In this Fool Live video clip recorded on Jan. 25, Fool.com contributors Jason Hall and Brian Withers discussed why Apple's business could get some big tailwinds going forward.
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Jason Hall: Apple is an interesting one, right? This is a company who revenue actually fell last quarter, net income, I think fell a little bit too. You think about a company that's worth almost $2.5 trillion. How in the heck can they get any bigger, right? There are a couple of things that are happening: Number one, we have the iPhone 12 has launched, this is the first 5G-enabled phone. There's been a lot of talk about this super-cycle, it's something like over the next couple of years, Apple could upgrade two-thirds of its entire install base, which is an enormous number of phones that it would sell at a very, very high level of profitability. The other thing is that Apple has continued to grow that services revenue. That was up 16% last quarter. Even though net income declined, the services revenue continues to grow. Here's the thing. So much of that services' revenue is tied to selling iPhones, just about everything comes through the iPhone now so that even that services revenue is important to the continued growth of selling the iPhones. It looks like Apple Fitness+ has been a pretty big hit. This is something that as much as there has been talk about Apple's ecosystem and its App Store, and the revenues that it takes from there as a cut, having more of these exclusive products that are directly Apple-related could go a really huge way toward the company continuing to be just an absolute monster, incredibly cash-flow positive, growing that dividend like crazy, still sitting on a mountain of cash. It's hard to argue against this as not being just a wonderful business. I have a confession. I thumbs-downed it earlier last year in CAPS, and I'm going to leave it a thumbs down because I'm not sure if it's going to be a market outperformer. It is sure hard to argue against owning the business. They're not mutually exclusive things. Anything to add for in the next 30 seconds, guys?
Brian Withers: Yeah. I would just say like this Fitness Plus and Apple TV and people go "meh." They have a billion iPhones out there installed, and even if 1% of the folks install Fitness Plus at 999 a month.
Hall: A lot of money. [LAUGHTER]
Withers: It's a big business.
Hall: A lot of very high-margin money too.