Apple (NASDAQ: AAPL) stock price hit a new all-time high despite a sluggish start of this year. Its shares are trading around $228, up 45% since the start of this year. The year to date rally has helped in erasing all the losses that it had made during the final quarter of last year.
Apple stock price upside momentum is supported by investors’ confidence in its strategy of diversifying revenue base.
The increasing revenue from accessories, services, and Apple streamlining service helps in offsetting lower revenue from the iPhone category.
Revenue Diversification is Key
Its iPhone revenue of $26B in the third quarter fell short from the consensus estimate of $26.31B. Despite lower iPhone revenue, its revenue from Wearables, Home, and Accessories stood at $5.5B, up from the consensus of $4.82B. On top, its services revenue hit a new record of $11.5B in the third quarter.
Citi analyst Jim Suva said, “We expect Apple’s Services offerings to lift investor spirits while tariffs/trade issues weigh on iPhone unit sales.” The firm has set Apple stock price target at $250.
Its strategy of launching Apple Plus TV is among the steps of diversifying its revenue base. The company is planning to launch a TV service next month.
Outlook is Improving
The company expects improvement in iPhone and services revenue in the coming quarters. It expects fourth-quarter revenue to stand in the range of $61-64B. However, analysts expect it to top the estimates on the back of higher than expected iPhone11 sales.
Citi analyst Jim Suva says Apple is likely to benefit from soft expectations. This would help it in topping guidance and setting a bull case for the share price.
Apple has recently told its suppliers to enhance the production of the iPhone 11 series.
The company demanded a production boost of up to 10%. This represents a growth of 10 million units from previous estimates. Overall, Apple stock price is set to extend momentum amid the potential improvement in revenues.