Latest news with #WamsiMohan
Mint
10 hours ago
- Business
- Mint
The driver of Apple's exploding valuation is under threat. See what's at stake.
Apple sold the same number of iPhones in 2024 as it did in 2015, according to IDC. But Apple stock has jumped ninefold in that time. One reason for the continued run in the shares has been the various services Apple sells to people living their digital lives in its ecosystem. iCloud storage and other subscriptions, paid apps and app advertising, as well as payments related to web search, as a group, have quintupled since 2015, while device revenue has grown less than 40%. And those services generate significantly higher gross profit margins: north of 70%, estimates Bank of America, compared with roughly 30% to 40% for hardware sales. That means the services business has a greater impact on Apple's profit than on its revenue. Bank of America analyst Wamsi Mohan credits Apple's choice to break out the rapidly growing, highly profitable services segment as a reason investors started paying a bigger earnings multiple for Apple shares. Yet after a big boost during the pandemic, growth of services has moderated, and two clouds are visible on the horizon that could reduce or even eliminate key parts of the business. A primary component of Apple's services business is the fees Apple collects on sales in its App Store, which drove almost a third of the total services revenue in the fiscal year that ended in September, according to Bank of America estimates. Some developers say the fees are usurious and have appealed to regulators or sued Apple to force changes. A California judge ruled that Apple must allow app developers to sell their iPhone services from their own websites. In that scenario, she said, Apple can't collect any fee at all. In a worst-case scenario, Bank of America estimates that Apple could lose 10% of its net profit. But that assumes all large developers shift all of their app purchases outside the App Store, which is very unlikely, and Apple is appealing the ruling in the U.S. In the European Union, a law called the Digital Markets Act requires similar changes to allow developers to avoid Apple's fees. Some experts have expressed concern that other countries could follow suit. Apple disagreed with the California judge's ruling, a spokeswoman said. It also appealed the ruling of the European Commission, saying the changes it is forcing the company to make go beyond what the law requires and are bad for users. The next piece of Apple's services business—and one of its most lucrative—is the money Google pays so it gets to be the default search provider in Apple's Safari web browser. It accounted for about 6% of Apple's overall revenue in the 12 months through March, estimates Bank of America. But because it has essentially no costs associated with it, it falls straight to the bottom line, where it accounts for 19%, or nearly a fifth, of Apple's total operating profit. After the Justice Department won its antitrust case against Alphabet's Google, it asked the judge to throw out the search giant's Apple contract, which the judge is still considering. During trial testimony, the judge asked Apple executive Eddy Cue, who oversees the services business, if Apple has thought about what it would do if he cancels the contract. Cue testified: 'I've lost a lot of sleep thinking about it." Advertising, particularly by apps in the App Store, is another big chunk of services revenue. Subscriptions to iCloud storage, Apple Music, Apple TV and other services add even more to Apple's services business. News Corp, owner of The Wall Street Journal, has a commercial agreement to supply news through Apple services. While Apple has bested expectations in many arenas of its services business outside of the App Store and Google payments, the company will still face an uphill battle in replacing lost revenue from those two areas, analysts say.
Hindustan Times
11 hours ago
- Business
- Hindustan Times
The Driver of Apple's Exploding Valuation Is Under Threat. See What's at Stake.
Apple sold the same number of iPhones in 2024 as it did in 2015, according to IDC. But Apple stock has jumped ninefold in that time. One reason for the continued run in the shares has been the various services Apple sells to people living their digital lives in its ecosystem. iCloud storage and other subscriptions, paid apps and app advertising, as well as payments related to web search, as a group, have quintupled since 2015, while device revenue has grown less than 40%. And those services generate significantly higher gross profit margins: north of 70%, estimates Bank of America, compared with roughly 30% to 40% for hardware sales. That means the services business has a greater impact on Apple's profit than on its revenue. Bank of America analyst Wamsi Mohan credits Apple's choice to break out the rapidly growing, highly profitable services segment as a reason investors started paying a bigger earnings multiple for Apple shares. Yet after a big boost during the pandemic, growth of services has moderated, and two clouds are visible on the horizon that could reduce or even eliminate key parts of the business. A primary component of Apple's services business is the fees Apple collects on sales in its App Store, which drove almost a third of the total services revenue in the fiscal year that ended in September, according to Bank of America estimates. Some developers say the fees are usurious and have appealed to regulators or sued Apple to force changes. A California judge ruled that Apple must allow app developers to sell their iPhone services from their own websites. In that scenario, she said, Apple can't collect any fee at all. In a worst-case scenario, Bank of America estimates that Apple could lose 10% of its net profit. But that assumes all large developers shift all of their app purchases outside the App Store, which is very unlikely, and Apple is appealing the ruling in the U.S. In the European Union, a law called the Digital Markets Act requires similar changes to allow developers to avoid Apple's fees. Some experts have expressed concern that other countries could follow suit. Apple disagreed with the California judge's ruling, a spokeswoman said. It also appealed the ruling of the European Commission, saying the changes it is forcing the company to make go beyond what the law requires and are bad for users. The next piece of Apple's services business—and one of its most lucrative—is the money Google pays so it gets to be the default search provider in Apple's Safari web browser. It accounted for about 6% of Apple's overall revenue in the 12 months through March, estimates Bank of America. But because it has essentially no costs associated with it, it falls straight to the bottom line, where it accounts for 19%, or nearly a fifth, of Apple's total operating profit. After the Justice Department won its antitrust case against Alphabet's Google, it asked the judge to throw out the search giant's Apple contract, which the judge is still considering. During trial testimony, the judge asked Apple executive Eddy Cue, who oversees the services business, if Apple has thought about what it would do if he cancels the contract. Cue testified: 'I've lost a lot of sleep thinking about it.' Advertising, particularly by apps in the App Store, is another big chunk of services revenue. Subscriptions to iCloud storage, Apple Music, Apple TV and other services add even more to Apple's services business. News Corp, owner of The Wall Street Journal, has a commercial agreement to supply news through Apple services. While Apple has bested expectations in many arenas of its services business outside of the App Store and Google payments, the company will still face an uphill battle in replacing lost revenue from those two areas, analysts say. This explanatory article may be periodically updated. Write to Rolfe Winkler at and Nate Rattner at
Yahoo
a day ago
- Business
- Yahoo
Can Apple's Slim iPhone And Cheaper Macs Reverse The 2025 Stock Slump?
Apple (NASDAQ:AAPL) is gearing up for a significant rebound in the second half of fiscal 2025, driven by the highly anticipated launch of new product cycles, including a 'slim' iPhone, and sustained momentum in its lucrative Services division, even as it contends with rising tariff costs and ongoing regulatory challenges. On Monday, Bank of America Securities analyst Wamsi Mohan reaffirmed a Buy rating on Apple, maintaining a price forecast of $235. As Apple prepares to release its fiscal third-quarter earnings on July 31, investor sentiment, as noted by Mohan, remains somewhat concerns include escalating tariff-related costs, scrutiny from the Department of Justice regarding Google's traffic acquisition cost (TAC) payments, ongoing headwinds for the App Store, and the perceived slow pace of Apple's advancements in artificial intelligence. Nevertheless, the impending earnings call is expected to shift focus towards gross margin trends and the projected recovery trajectory fueled by forthcoming product launches. For fiscal third-quarter 2025, Mohan projects revenue of $90.2 billion and earnings per share (EPS) of $1.45, figures that slightly surpass consensus Street estimates of $89.3 billion and $1.43, respectively. The analyst anticipates a gross margin of approximately 46.1%, aligning with Apple's guidance midpoint, despite the absorption of an estimated $900 million in tariff-related costs. Looking ahead to the fourth quarter, projections indicate revenue of $99.5 billion and EPS of $1.66, largely in line with Street expectations. While gross margin is projected to dip to 45% due to an additional $1 billion in tariff impact, Mohan views this quarter as a trough, with margins expected to improve heading into fiscal 2026. Mohan noted that a key driver of this expected rebound is the highly anticipated 'slim' iPhone, potentially branded as the iPhone 'Air,' which Apple is likely to launch in fall 2025. The analyst said that this model, expected to replace last year's Plus version, will reportedly have a 6.6-inch display, measure just 6mm thick, and carry a price tag $100 higher than the Plus. He noted that the shift in product mix toward higher average selling prices (ASP) is anticipated to drive gross margin expansion and boost replacement rates. Mohan modeled stronger iPhone sales in the September and December quarters on the back of this launch. On the Mac front, Apple is expected to benefit from the March launch of the new MacBook Air featuring the M4 chip, which provides improved performance at a reduced entry price of $999, or $100 lower than its predecessor, the analyst noted. He said this is expected to drive better-than-seasonal Mac revenue in the June and December quarters. Similarly, Mohan said the iPad segment could receive a boost from the expected fall launch of iPad Pro models equipped with the M5 chip. The analyst anticipates revenue growth in iPads driven by higher ASPs and product upgrades. Apple's Services segment continues to show steady growth, Mohan noted. For the third quarter, he expects Services revenue of $27.1 billion, up 2% quarter-over-quarter and 12% year-over-year. Substantial year-over-year gains are projected across the App Store (+12%), Licensing (+18%), Subscriptions (+9%), and Apple Pay (+18%), as per the analyst. For the fourth quarter, Services are projected to rise another 3% sequentially to $28 billion, again marking a 12% annual increase, with Licensing and Apple Pay both expected to grow over 20% year-over-year, Mohan noted. Mohan slightly raised estimates for the full fiscal year 2025. Revenue is now forecast at $409 billion (up from $408 billion), and EPS at $7.15 (up from $7.13). The price forecast remains $235, based on a 29x multiple of fiscal 2026 estimated EPS of $8.20. While Apple faces near-term margin pressure and regulatory noise, Mohan noted upside potential in new product cycles, improving Services momentum, and ASP-driven gross margin recovery, positioning the stock for renewed strength in the back half of the year. AAPL Price Action: Apple stock is trading higher by 0.10% to $214.06 at last check on Monday. Image via Shutterstock Latest Ratings for AAPL Date Firm Action From To Mar 2022 Barclays Maintains Equal-Weight Feb 2022 Tigress Financial Maintains Strong Buy Jan 2022 Credit Suisse Maintains Neutral View More Analyst Ratings for AAPL View the Latest Analyst Ratings Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? This article Can Apple's Slim iPhone And Cheaper Macs Reverse The 2025 Stock Slump? originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Yahoo
4 days ago
- Business
- Yahoo
IBM Stock Seen as Defensive Play With AI Tailwinds and FX Boosts
International Business Machines Corporation (NYSE:) is one of the . On July 21, BofA Securities analyst Wamsi Mohan reiterated a "Buy" rating and a $320.00 price target on the stock. The firm sees a 'tough near-term setup given YTD outperformance but structural LT tailwinds.' It believes Red Hat (RHT) will grow faster, and that foreign exchange tailwinds may also be present. However, there may be weaknesses in IBM's consultancy business, similar to those of its peers. 'IBM reports F2Q25 earnings on July 23rd, and we believe investors expect an acceleration in RHT, potential FX tailwinds, and for Consulting to be weak (similar to peers). While the tactical setup is a bit challenging given decelerating trends in parts of the business, we reiterate our Buy rating as we continue to view IBM as a defensive investment with improving revenue growth, which in turn can drive higher cash flows that could be re-invested for more M&A. We expect IBM to largely maintain its overall guide for the year but with slightly lower Transaction processing (TP) and slightly better RHT.' International Business Machines Corporation (NYSE:IBM) is a multinational technology company and a pioneer in artificial intelligence, offering AI consulting services and a suite of AI software products. While we acknowledge the potential of IBM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and Disclosure: None. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Globe and Mail
11-07-2025
- Business
- Globe and Mail
Apple (AAPL): New Buy Recommendation for This Technology Giant
Bank of America Securities analyst Wamsi Mohan maintained a Buy rating on Apple yesterday and set a price target of $235.00. The company's shares closed yesterday at $211.14. Don't Miss TipRanks' Half-Year Sale Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. Mohan covers the Technology sector, focusing on stocks such as Apple, Seagate Tech, and International Business Machines. According to TipRanks, Mohan has an average return of 12.3% and a 61.06% success rate on recommended stocks. Currently, the analyst consensus on Apple is a Moderate Buy with an average price target of $228.27, which is an 8.11% upside from current levels. In a report released yesterday, Morgan Stanley also maintained a Buy rating on the stock with a $235.00 price target. AAPL market cap is currently $3136.7B and has a P/E ratio of 32.77. Based on the recent corporate insider activity of 38 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of AAPL in relation to earlier this year. Most recently, in May 2025, Chris Kondo, the CAO of AAPL sold 4,486.00 shares for a total of $933,940.34.
