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Apple's Services unit is growing on strong streaming, gaming launches and Podcast upgrades.
Apple hit record Q1 FY26 revenues in ads, music, payments and cloud, with double-digit subscriber growth.
AAPL shares rose 17.2% in six months and trade at 30.37X forward earnings, above sector levels.
Apple’s (AAPL - Free Report) Services business is benefiting from strong streaming content, including sports, an expanding game portfolio, and an upgraded Podcast app. While Apple TV has started streaming Major League Soccer, Oceanhorn 3: Legend of the Shadow Sea, the latest chapter of the role-playing game franchise, is launching exclusively on Apple Arcade on March 5. The company has now added golf to its supported sports at Apple Sports, its free app for iPhone, while Apple Podcasts is set to get an upgrade with the addition of advanced video podcast capabilities based on AAPL’s HTTP Live Streaming (HLS) technology.
The Services business has evolved as a key catalyst for Apple’s prospects. Services, which comprises Apple’s advertising business, AppleCare, Cloud Services, Digital content (Arcade, Music, Fitness+, TV and News+) and Payment services (Apple Card & Apple Pay), is riding on an expanding base of installed devices (over 2.5 billion). In the first quarter of fiscal 2026, Apple hit all-time revenue records on advertising, music, payment services and cloud services, where it saw double-digit growth on paid subscribers.
Apple’s Services segment benefits from the growing popularity of Apple TV+. Apple has scored six nominations in total from the Academy of Motion Picture Arts and Sciences this year, including Best Picture for F1, alongside Best Sound, Best Visual Effects and Best Editing. Documentary Come See Me in the Good Light lands a Best Documentary Feature Film nomination, and The Lost Bus earned a nomination for Best Visual Effects. The addition of Apple Intelligence on devices, including the iPhone, is expected to boost Services revenues in the long term.
The Zacks Consensus Estimate for fiscal 2026 Services sales is pegged at $123.28 billion, indicating 13% growth from the figure reported in fiscal 2025.
Apple Faces Stiff Competition
AAPL is facing stiff competition from the likes of Amazon (AMZN - Free Report) and Microsoft (MSFT - Free Report) in domains like streaming and gaming.
Amazon offers Prime Video bundled with its Amazon Prime membership. The service offers both ad-supported and ad-free options. In comparison to Apple TV+, Amazon Prime Video has a much larger content portfolio, including originals. Microsoft’s gaming assets include Xbox and Activision Blizzard, and it is investing heavily in gaming studios and subscriptions.
Apple shares have jumped 17.2% in the trailing six-month period, outperforming the broader Zacks Computer and Technology sector’s return of 10.6%.
Apple Stock’s Performance
Image Source: Zacks Investment Research
The AAPL stock is trading at a premium, with a forward 12-month price/earnings of 30.37X compared with the broader sector’s 25.5X. AAPL has a Value Score of F.
AAPL Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $8.41 per share, up 3% over the past 30 days, suggesting 12.7% year-over-year growth.
View the Zacks #1 Rank List
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Apple's Services Growth Ride on Strong Content & Games: What's Ahead?
Key Takeaways
Apple’s (AAPL - Free Report) Services business is benefiting from strong streaming content, including sports, an expanding game portfolio, and an upgraded Podcast app. While Apple TV has started streaming Major League Soccer, Oceanhorn 3: Legend of the Shadow Sea, the latest chapter of the role-playing game franchise, is launching exclusively on Apple Arcade on March 5. The company has now added golf to its supported sports at Apple Sports, its free app for iPhone, while Apple Podcasts is set to get an upgrade with the addition of advanced video podcast capabilities based on AAPL’s HTTP Live Streaming (HLS) technology.
The Services business has evolved as a key catalyst for Apple’s prospects. Services, which comprises Apple’s advertising business, AppleCare, Cloud Services, Digital content (Arcade, Music, Fitness+, TV and News+) and Payment services (Apple Card & Apple Pay), is riding on an expanding base of installed devices (over 2.5 billion). In the first quarter of fiscal 2026, Apple hit all-time revenue records on advertising, music, payment services and cloud services, where it saw double-digit growth on paid subscribers.
Apple’s Services segment benefits from the growing popularity of Apple TV+. Apple has scored six nominations in total from the Academy of Motion Picture Arts and Sciences this year, including Best Picture for F1, alongside Best Sound, Best Visual Effects and Best Editing. Documentary Come See Me in the Good Light lands a Best Documentary Feature Film nomination, and The Lost Bus earned a nomination for Best Visual Effects. The addition of Apple Intelligence on devices, including the iPhone, is expected to boost Services revenues in the long term.
The Zacks Consensus Estimate for fiscal 2026 Services sales is pegged at $123.28 billion, indicating 13% growth from the figure reported in fiscal 2025.
Apple Faces Stiff Competition
AAPL is facing stiff competition from the likes of Amazon (AMZN - Free Report) and Microsoft (MSFT - Free Report) in domains like streaming and gaming.
Amazon offers Prime Video bundled with its Amazon Prime membership. The service offers both ad-supported and ad-free options. In comparison to Apple TV+, Amazon Prime Video has a much larger content portfolio, including originals. Microsoft’s gaming assets include Xbox and Activision Blizzard, and it is investing heavily in gaming studios and subscriptions.
AAPL’s Share Price Performance, Valuation & Estimates
Apple shares have jumped 17.2% in the trailing six-month period, outperforming the broader Zacks Computer and Technology sector’s return of 10.6%.
Apple Stock’s Performance
Image Source: Zacks Investment Research
The AAPL stock is trading at a premium, with a forward 12-month price/earnings of 30.37X compared with the broader sector’s 25.5X. AAPL has a Value Score of F.
AAPL Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $8.41 per share, up 3% over the past 30 days, suggesting 12.7% year-over-year growth.
Apple Inc. Price and Consensus
Apple Inc. price-consensus-chart | Apple Inc. Quote
Apple currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.