Any record of probably the most profitable firms of all time would little doubt embrace Apple (AAPL -1.03%). By specializing in design and the person expertise, Apple created revolutionary and disruptive merchandise that constantly joined the cultural zeitgeist. The iPod was the primary of its merchandise to attain mass adoption, however Apple continued an unprecedented profitable streak with the iPhone, iPad, Apple Watch, and AirPods.
These fan-favorite merchandise weren’t the primary to market, however every quickly dominated their respective classes. As a results of its lengthy historical past of success, Apple has the excellence of being the world’s Most worthy firm, the primary U.S. firm to attain market caps of $1 trillion, $2 trillion, and $3 trillion, respectively.
Recent knowledge launched by Piper Sandler consists of three causes traders can buy Apple inventory and by no means promote.
Image supply: Apple.
The underlying knowledge
Just this week, Piper Sandler launched its forty sixth semi-annual Taking Stock With Teens survey, which tallied responses from 9,193 teenagers in Generation Z. The report assesses discretionary spending, style traits, know-how, and model and media preferences of highschool college students throughout the U.S.
As in earlier surveys, Apple services featured prominently, which factors to the enduring attraction of the corporate’s gadgets and the persevering with utility of its providers. Three key factors within the survey must be of eager curiosity to Apple traders.
1. Generational demand for the iPhone
The phrase “dominate” is usually thrown round fairly freely, however on this case, it is not merely hyperbole. A whopping 87% of teenagers reported proudly owning an iPhone, a proportion that has been constantly rising lately. In the autumn of 2017, 78% of teenagers reported proudly owning an iPhone, which illustrates the rising enchantment of the enduring gadget. Furthermore, 88% of teenagers anticipate their subsequent cellular gadget to be an iPhone, up from 82% in 2017.
This is essential to Apple traders because the iPhone represents the lion’s share of the corporate’s gross sales. For the corporate’s fiscal 2022 (ended Sept. 24, 2022), the iPhone was answerable for 52% of Apple’s income. That development continues. For the primary 9 months of fiscal 2023 (ended July 1), iPhone accounted for 53% of Apple’s income.
The iPhone is the foundational product in Apple’s ecosystem, and all different services revolve round it.
2. The iPhone is a gateway product
Once a client owns an iPhone, probabilities enhance considerably that they are going to buy different Apple merchandise, lots of that are designed to reinforce the iPhone expertise. 34% of the teenagers surveyed reported proudly owning an Apple Watch, which is essentially a companion product whose performance is deeply built-in with the iPhone.
During the autumn of 2016, simply 5% of teenagers deliberate to purchase an Apple Watch, a proportion that has steadily elevated in every successive survey. In reality, by early 2021, Apple Watch overtook Rolex as the favourite watch model of upper-income teenagers and has retained the No. 1 place ever since.
3. The Apple ecosystem makes the iPhone even stickier
It’s laborious to overstate the significance of Apple’s rising ecosystem and the way pervasive its services will be. Take one thing so simple as paying for retail purchases. While many older customers nonetheless depend on credit score and debit playing cards, fee apps are the order of the day for teenagers.
This is one other space the place Apple ranked supreme. Apple Pay was the No. 1 fee app used over the previous month, at 42%. For context, Block‘s Cash App got here in second with 27%. This helps illustrate how a lot of a lead Apple has amassed over its fintech rivals.
What all this implies for Apple
The significance of Apple’s enchantment to youthful consumers cannot be overstated. While teenagers aren’t but the first wage earners, they’re establishing their likes and dislikes, which can assist inform their shopping for patterns for years to return.
The sheer dominance of the iPhone amongst teenagers and the sturdy demand for ancillary services illustrates that — all issues being equal — demand for Apple merchandise ought to proceed for years to return.
That’s excellent news for Apple — and its traders.
