Where Will Apple Stock Be in 3 Years?

Apple (AAPL 5.98%) has undoubtedly been one of the best investments anyone could've made over the past decade, as its shares are up an incredible 1,000% since late April 2013. Even legendary investor Warren Buffett has benefited, as Berkshire Hathaway has been a shareholder for over seven years now. 

But with a market capitalization of $2.6 trillion (as of this writing), investors are likely wondering what's in store for this dominant enterprise as we look ahead. Along the same line, where will Apple stock be in three years? 

Apple's ubiquity 

Investors are all too familiar with just how important a single product is to Apple's fortunes. The iPhone represented 56% of total company revenue in the latest fiscal quarter (Q1 2023 ended Dec. 31). And it's the gateway product that brings consumers in. 

"We're proud to now have over 2 billion active devices in our installed base," CFO Luca Maestri said on the Q1 2023 earnings call. This massive installed base has doubled over the past seven years, a remarkable feat that exemplifies Apple's ubiquity. While the majority of these devices are iPhones, it's worth noting the success of Apple's other products.

Apple isn't resting on its laurels. It's continuing what it has long been known for -- a relentless focus on innovation. Refreshing existing products, like the iPhone, MacBook, or Apple Watch, is always a part of the game plan. But sometimes, completely new products are introduced. The most anticipated product release in the near term is a headset that combines augmented reality and virtual reality, which is set to launch in June. There are also rumors swirling that Apple could be working on a phone that folds. 

There's possibly an even bigger product on the horizon that can be an absolute game changer. It is still believed that Apple is working on an electric vehicle. Unsurprisingly, information about this is scarce, but it's hard to imagine a scenario where an automobile designed and made by Apple, with integration into the software ecosystem, doesn't immediately become a hit. And because the car market is gigantic, this has the potential to move the needle for the business. 

Although Apple isn't usually the first to bring a new product to market, it has proven that what it offers can be the best. Finding ways to have a higher number of active devices across the world, whether it's phones, tablets, headsets, or cars, feeds into Apple's powerful ecosystem, making its economic moat that much stronger. 

Besides beautiful hardware products, Apple's services segment is becoming a more important part of the business that drives customer loyalty and stickiness. In the latest fiscal quarter, services accounted for 18% of total sales, a percentage that has increased steadily over time. This segment carries a gross margin of over 70%, much higher than the products group, so investors can expect Apple's profitability to rise in the years ahead. 

Moreover, Apple's ongoing foray into financial services has been impressive, with Apple Pay, Apple Card, and now a high-yield savings account added to the mix. The business attracts a more affluent customer base, so these offerings are poised to do well in the long run, providing Apple with another key revenue driver. 

Apple's shareholder focus 

With its gargantuan size and remarkable historical stock performance, it's hard not to like this company. With the combination of more active devices, proven pricing power, and a burgeoning services segment, Apple's revenue should continue marching higher. And with this, greater profits will follow. Berkshire Hathaway has already made a killing owning the company, and as of Dec. 31, Apple constituted 44% of the overall portfolio. As a result, Buffett is clearly still bullish on the stock. 

And for good reason. Apple has rewarded its shareholders in spectacular fashion. The share price is up 132% in just the last three years. And since the start of fiscal 2020, Apple has paid over $47 billion in dividends. But if that isn't enough, the business continues repurchasing shares like there's no tomorrow. Over the past 13 fiscal quarters, Apple has spent a whopping $267 billion on buybacks. 

Clearly, this is a cash machine that is well positioned to keep up the outstanding fundamental performance investors have become accustomed to. And this bodes well for the stock.