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Shares of Apple (AAPL -1.33%) have delivered returns of 33% in 2024 as of this Dec. 30. They have gained momentum since the company released results for its fiscal 2024 fourth quarter (which ended Sept. 28) on Oct. 31.
Many investors have turned bullish about Apple’s prospects after seeing those results, which revealed upticks in sales of iPhones, iPads, and MacBooks. Additionally, the company’s services business achieved double-digit percentage year-over-year growth during the quarter.
But what are the prospects for Apple’s major product lines for 2025? Can this technology giant sustain its recent rally and head higher next year?
Artificial intelligence could give Apple’s sales a nice boost in 2025
Apple’s revenue increased 6% year over year in its fiscal Q4 to $94.9 billion. Adjusted earnings increased 12% to $1.64 per share after excluding the one-time impact of the State Aid decision by the European General Court. Including the impact of that decision, Apple’s diluted earnings came in at $0.97 per share, down from $1.46 per share in the same quarter last year.
For the fiscal year, revenue rose 2% to $391 billion, but adjusted earnings, shrunk to $6.08 per share from $6.13 per share in fiscal 2023 (including the impact of the European General Court decision). This shows how Apple’s growth accelerated toward the end of the fiscal year, which was attributable to the stronger sales of iPhones, MacBooks, and iPads.
These sales will likely further benefit from the growing adoption of generative artificial intelligence (AI) in 2025. The company started rolling out its Apple Intelligence suite of generative AI features across these products in 2024, and more features will be made available in 2025. It is expected that the gradual rollout of Apple Intelligence will eventually drive a jump in sales of iPhones.
For instance, IDC is expecting shipments of iOS-based iPhones to increase by 3.1% in 2025, while Android device shipments are only forecast to grow by 1.7%.
Favorable scenarios can be expected for MacBooks and iPads as well. That’s because sales of these devices are set to get a boost thanks to AI in 2025. Gartner is forecasting a 165% increase in shipments of AI PCs in 2025 to 114 million units. Given that Apple is the fourth-largest PC OEM (original equipment manufacturer), it is well-placed to benefit from the secular growth of the AI-enabled PC market.
Meanwhile, the tablet market has also gained impressive momentum, with shipments increasing 20% year over year in the third quarter of calendar 2024 (per IDC). Apple is the top player in tablets, with an almost 32% market share. All this puts Apple in a nice position to capitalize on what Gartner forecasts will be a 9.5% jump in device spending next year, driven by customers looking to gain access to AI features.
As such, there is a good chance that Apple will grow at a faster pace in its fiscal 2025 than it did in fiscal 2024.
Can the stock continue outperforming in 2025?
The analysts covering Apple have a median 12-month price target of $250 on the stock. That’s near where it is trading right now, suggesting that there may not be much upside coming in 2025. However, the analysts also expect Apple’s revenue and earnings growth is set to accelerate in fiscal 2025.
AAPL Revenue Estimates for Current Fiscal Year data by YCharts.
Its top line is expected to jump nearly 6% to $414.4 billion. Bottom-line growth is expected to come in at almost 10% to $7.39 per share. However, if Apple manages to outperform these expectations on the back of AI-powered growth in its device sales, there is a good chance that the market may reward the stock.
Moreover, the possibility of Apple monetizing its AI offerings effectively cannot be ruled out. This could give its services business a nice boost as well. As such, investors would do well to continue holding this tech stock in their portfolios as the improving prospects of its end markets and its solid position in areas such as smartphones, PCs, and tablets could be enough for Apple’s stock to sustain its impressive momentum.
Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.
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