Considering the issues it has faced over the past year, Apple (AAPL 1.94%) has performed pretty well, although it has lagged the S&P 500. However, there will be lingering issues moving forward. The tech giant might also pounce on some exciting opportunities. Which way will the stock move over the next five years? Let's see where Apple could be trading by 2031.
New iPhones will drive growth
Apple is currently in the middle of a robust renewal cycle. The company's latest iPhone, the 17, proved popular and should allow it to get back to double-digit, quarterly year-over-year top-line growth, based on management guidance. The iPhone 17 was a hit partly because of the added artificial intelligence (AI) features. This device might not be a growth driver through 2031, but by then, Apple will have launched newer versions of its flagship product.
Image source: Getty Images.
The tech leader tends to keep things close to the vest, but according to some rumors, Apple is planning major AI overhauls for its next devices -- something that could improve performance and attract even more consumers. Apple's growing installed base will also allow it to boost revenue from its high-margin, faster-growing services segment. By 2031, services should make an even larger portion of revenue -- it was 39% of its latest period, up from 29% five years ago.
We could see services grabbing close to 50% of Apple's sales by 2031, which will have a meaningful impact on its profits and margins.
NASDAQ: AAPL
Key Data Points
There will be challenges
Apple hasn't escaped the threat of tariffs, although the company has tried to appease the current administration by expanding its local manufacturing capacity. But the iPhone maker's reliance on manufacturing in Asia-Pacific, especially in China, could leave it vulnerable to tariffs. There could also be a potential impact from ongoing antitrust lawsuits against Apple. Regulators in the U.S. have accused the company of monopolizing the smartphone market, among other things.
Regardless of the merits of the accusations (that's for a judge to decide), investors should monitor the progress of these lawsuits. Unfavorable outcomes could affect the company's strategic position, financial results, and share price.
Is Apple stock a buy?
Apple remains one of the most valuable brands in the world and continues to grow its installed base, with over 2 billion active devices in circulation. And the company's latest success with the iPhone 17 shows that its most important product can still be a growth driver. Services should meaningfully move the needle, too. And despite the threats of tariffs -- which it has handled well -- and antitrust lawsuits, my view is that Apple is well positioned to deliver competitive returns over the next five years. The stock is currently priced at about $249.
By 2031, it could be trading above $410, registering a compound annual growth rate of at least 10.5% through this period. Apple stock remains a buy.
