Apple (AAPL -0.12%) has managed an incredible growth story and is worth more than $2 trillion, making it the most valuable company in the world. As a company gets larger, growing at the same pace gets much harder as growth opportunities get exhausted. For a company the size of Apple, it may seem like it's running out of growth opportunities.
Thankfully for Apple investors, there's still room for the business to get bigger. For example, earlier this month, the company launched its first store in India. Here's why continuing efforts to expand into that emerging market will end up being a great move for the tech giant.
India's economy offers growth opportunities for Apple
A big opportunity for Apple is global expansion. Of the $117 billion in revenue it generated in the last three months of 2022, $77 billion came from the Americas and Europe. Greater China brought in just under $24 billion. The remaining markets, Japan and the "Rest of Asia Pacific" region, brought in just over $16 billion and represented 14% of total revenue. India is an insignificant market for Apple right now and is included within its European segment.
But India, one of the largest economies in the world, can open up some big growth potential for Apple and further diversify its global operations. While Apple's growth was strong during the early stages of the pandemic, things have begun to slow down for the company and it could certainly use a growth catalyst.
AAPL Revenue (Quarterly YoY Growth) data by YCharts
Apple is already planning to make India a big part of its manufacturing
In an effort to diversify and lessen its dependence on China, Apple is planning to manufacture more of its products in India. The company plans to make up to one-quarter of its iPhones in India by 2025. Other tech companies are also looking to India as a manufacturing hub, including Alphabet, which plans to make some of its Pixel phones in the country.
Making iPhones in India can make it easier for Apple to offer its products at lower prices there as shipping costs would be minimal and tariffs wouldn't apply. It would also allow the company to more easily grow its market share in the country.
Apple Pay Later could make products more affordable in markets like India
Opening stores in India makes a lot more sense for Apple now that the company has also launched Apple Pay Later, which allows Apple Pay users to spread the cost of their purchases into four payments while incurring no interest and fees. The company introduced the service in the U.S. earlier this year. If it proves to be successful, it's possible for Apple to expand that service and offer it in India, which could make its products and services more affordable in the market.
Although it's still in the early stages, buy now, pay later (BNPL) services have been on the rise in recent years and present a significant growth opportunity. Analysts from Grand View Research project that there were over $200 billion BNPL transactions in 2022. And the market for BNPL will grow at a compound annual growth rate of 26.1% until 2030, so there's a big incentive for Apple to not miss out on this opportunity. By reaching a broader and more diverse customer base, Apple can unlock even more growth opportunities in the future.
Is Apple stock a buy?
Apple's business is already worth a whopping $2.6 trillion, but given the company's vast ecosystem that includes music, streaming, fitness, savings accounts, and many other services, the more users that it can get using iPhones and iPads, the more potential there is for the business to multiply that revenue in the future. And India is a fantastic opportunity for the business to pursue in the long run, especially as it ramps up manufacturing there and if it makes Apple Pay Later available to Indian customers.
While its growth rate has been slowing down in recent quarters, expanding into India could help the company accelerate its top line. And that's why for long-term investors, Apple remains a top tech stock to buy and hold.
