In fiscal 2025, Apple’s services business generated $109.2 billion in revenue, up 14% year over year, driven by double-digit gains in the App Store, advertising and cloud offerings. In Q4 alone, services revenue climbed 15% to a record $28.8 billion, representing 75.3% gross margin—more than double the 36.2% margin on hardware sales. Weekly App Store users averaged 850 million, Apple Pay expanded to 89 markets with over 11,000 banking partners, and Apple TV viewing hours surged 36% in December. Management expects services growth in fiscal 2026 to match or exceed these rates, buoyed by Apple Intelligence enhancements and deeper integration across devices.

In January 2026, Apple and Alphabet formalized a multiyear agreement to embed Google’s Gemini models into iOS, giving Apple instant access to leading-edge AI capabilities without rebuilding core infrastructure. Wedbush analyst Dan Ives praised the deal as evidence that Apple is leveraging external expertise to accelerate Siri and in-app intelligence upgrades. The arrangement allows Apple to offload significant R&D expenditure on large language models while focusing internal teams on seamless user experience and privacy controls, positioning Apple to compete more effectively with AI-centric rivals in consumer devices and services.

Despite Samsung’s foldables capturing growing consumer attention, noted analyst Ming-Chi Kuo asserts that Apple’s late entry will not leave the company at a material disadvantage. Kuo highlights Apple’s software ecosystem and robust supply-chain partnerships as key assets that offset timing delays. Market forecasts by Counterpoint Research project global foldable shipments to exceed 50 million units by 2027, and Kuo suggests Apple could introduce a premium foldable model in late 2026 or early 2027, leveraging its customer base of over 1 billion active devices to drive rapid adoption once launched.