By Annie Gaus
Soon after passing $1 trillion in market capitalization, some Apple investors are already looking ahead to $2 trillion.
According to one Apple analyst, Ming-Chi Kuo of Hong Kong-based TF International Securities, it won’t be the iPhone, iWatch or even stock buybacks that will push Apple in that direction.
It will be — wait for it — augmented reality and cars, Kuo predicted in a note to clients this week, writing that “Services, AR, and Apple Car will create Apple’s next trillion-dollar market cap.”
Apple’s services segment — which is its umbrella category for software-based products like iTunes, the App Store, Apple Pay, iCloud and Apple Care, among others — is often cited as a key to Apple’s future growth as iPhone unit sales decelerate. With an estimated margin of 50%, services are more profitable than Apple’s core iPhone business, and Apple reported that revenue from the segment grew 31% year over year in the June quarter.
AR is still in its early days for Apple, but if the content of Apple’s WWDC conference in June was any indication, Apple executives see it as the next breakthrough technology. At the developer’s conference, Apple’s VP of software engineering Craig Federighi described AR as a “transformative technology” that will someday be accessible across all of Apple’s devices. And it’s working on some back-end tools to move that vision forward, such as a new file format, USDZ, that’s intended to make rendering smoother for AR developers. It also rolled out a new AR development kit, called ARKit 2.
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