Apple Inc.’s (AAPL) stock has been under a bit of pressure of late, as the market rally ran out of steam this week amid renewed inflationary jitters. Concerns over a slowing economy and ongoing supply chain challenges have weighed on Apple stock. Meanwhile, Apple unveiled its Business Essentials subscription aimed at small and medium-sized businesses (SMBs), a move that could give its services business a major long-term jolt. I am bullish on Apple stock.
The Business Essentials announcement didn’t give a boost to AAPL stock. Instead, near to medium-term woes seem to be dictating the stock’s trajectory rather than promising new growth pathways. In addition, the Business Essentials announcement, while somewhat surprising, wasn’t necessarily relevant to your average Apple consumer.
Still, the Business Essentials segment could allow Apple to get a foot in the door of a high-growth market that has typically been dominated by the likes of its long-time rival, Microsoft (MSFT).
Business Essentials Opens a New Door for Services Growth
For now, Apple is going for the smaller corner of the business market. The many creative firms and tech startups that favor Macs and iPads over PCs and Android devices can surely appreciate the time and cost savings of Apple’s IT solution, which bundles 24/7 support, device management, service and cloud storage.
Moreover, by catering to SMBs, Apple Business Essentials can grow alongside the firms using its services, as it learns the ropes with a solution that could one day appeal to larger businesses. Not to mention that there’s much more room to grow with SMBs.
Over time, though, Apple’s innovative M-series chip, which could continue outpacing PC-based chips, may allow Apple’s Business Essentials services to scale up to appeal to the enterprise crowd. Indeed, larger businesses, many of which already prefer iPad and iPhone, may begin viewing the Mac as more of a business-appropriate solution.
Investors may not have initially thought much of the Business Essentials reveal, but it would be a mistake to discount its growth potential. Undoubtedly, expansive hardware innovations and better integration across Apple devices could elevate the battle between Mac and PC to the next level. It appears that CEO Tim Cook is looking to bring the fight to Microsoft by going after high-margin business solutions.
Business management solutions aren’t just a new market that Apple can disrupt; it’s also an endeavour that could bring forth further scalability.
Wall Street’s Take
According to TipRanks’ consensus analyst rating, AAPL stock comes in as a Strong Buy. Out of 27 analyst ratings, there are 21 Buy and 6 Hold recommendations.
As for price targets, the average Apple price target is $170. Analyst price targets range from a low of $102 per share to a high of $125 per share.
The Bottom Line
The Business Essentials offering is a big deal. If successful, it could be the start of a more advanced offering tailored to enterprises. In any case, the product looks like a low-risk/high-reward undertaking that could create significant upside for AAPL moving forward.
While Apple is navigating outside of its circle of expertise, the odds that its Business Essentials service will succeed look quite high. The M-series line of chips alone is enough reason for SMBs to switch from PC to Mac. In terms of performance per watt, the M-series is a game-changer. With Business Essentials, Apple finally looks ready to take on the business world.
Disclosure: Joey Frenette owned shares of Apple at the time of publication.
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