How Does Apple Make Money?

Apple (NASDAQ: AAPL) was founded as Apple Computer Company in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne to sell the Apple I personal computer kit. Just four years later, Apple held its initial public offering. The Dec. 12, 1980, IPO was a major success, selling 4.6 million shares at $22 each while instantly creating over 300 millionaires. In fact, the offering generated more capital than any IPO since Ford Motor Company in 1956.

In the late 1990s and early 2000s, Apple launched a series of influential products that helped revitalize the brand, including the iMac, the iPod, and the iTunes store. The launch of the iPhone in 2007 was a pivotal moment. It redefined the smartphone industry by seamlessly integrating a phone, an iPod, and an internet communicator, thereby creating a new platform for apps and services for an entirely new generation of consumers.

In the nearly 20 years since the launch of the iPhone, Apple has gone through numerous changes as the economic landscape, the public markets, and its industry have evolved significantly. The company has remained a leader in innovation and grown to be one of the most valuable corporations in the world.

Here's what investors should know about how Apple makes money, its financials, recent developments with the company, and more.

Image source: Getty Images.

What does Apple do?

Apple is a global technology company that designs, manufactures, and sells consumer electronics, software, and online services. The company is known for its integrated hardware-software ecosystem. Apple serves individual consumers, small and mid-sized businesses, and the education, enterprise, and government markets.

Apple's primary products include its ever-expanding lineup of iPhones, its family of personal Mac computers, including the MacBook Air, MacBook Pro, iMac, and Mac mini that run on the macOS operating system, and the iPad. Apple also sells wearables and accessories, including the Apple Watch, AirPods, HomePod, Apple TV, AirTag, and the Vision Pro mixed-reality headset.

Apple also has a significant and growing services business that provides recurring revenue. These services include iCloud storage and syncing services, Apple Music, Apple TV+, Apple Arcade, Apple News+, Apple Fitness+, Apple Pay and Apple Card, and the App Store.

Apple produces movies through its subsidiary, Apple Studios, which creates original films for its streaming service, Apple TV+, and sometimes for theatrical release. The company has made significant investments in film production, and works with top talent on a wide range of projects, from award-winning dramas to major blockbusters.

Apple also boasts a growing advertising business that includes ads on its own platforms like the App Store, Apple News, and Apple TV+, as well as revenue from a deal with Google to be the default search engine on its devices. These services, which also include App Store commissions, are a major part of Apple's Services segment revenue.

How does Apple make money?

Apple earns money from two main sources: product sales and its high-margin services business. The largest portion of the company's revenue comes from sales of hardware like the iPhone, Mac, and iPad. However, the fastest-growing and most profitable part of Apple's business is its Services segment.

Apple's financials

Apple had a record fiscal year in 2025. The company achieved record revenue of $416 billion (up 6% from fiscal 2024) and capped it with another record-breaking fourth quarter ($102.5 billion in revenue, up 8% year over year). Full-year revenue by segment was as follows: iPhone ($209.6 billion), Mac ($33.7 billion), iPad ($28 billion), Wearables/Home/Accessories ($35.7 billion), and Services ($109.2 billion ). The fastest growing segment by far was the Services division, which generated sales growth of 14% in fiscal 2025 compared to the prior year.

For fiscal 2025, Apple achieved net income of $112 billion, a whopping 19.5% increase from fiscal 2024. Apple's active device base also reached an all-time high.

Recent developments

Apple is deeply integrating artificial intelligence (AI) across its entire ecosystem of devices and services. Its strategy involves a blend of in-house technology and strategic partnerships. Apple's approach to AI is to run many models locally on devices like iPhones, iPads, and Macs to maintain user privacy by keeping personal data on the device. For more complex requests, it leverages a system called Private Cloud Compute, where data is processed in the cloud on secure Apple silicon servers without being stored or shared by Apple.

Apple is developing advanced M-series chips (such as the M5) with powerful neural engines and neural accelerators in the graphics processing unit (GPU) that are specifically designed to supercharge AI workloads and run large AI models efficiently on-device. The M5 chip is available in the latest 14-inch MacBook Pro, iPad Pro, and Apple Vision Pro models released in October 2025.

Launched in 2024, the Apple Intelligence software suite includes features such as writing tools that help users communicate across languages and image-generation tools that allow users to quickly create fun visuals. Apple is reportedly planning a major overhaul of Siri to make it more conversational, context-aware, and capable using advanced large language models (LLMs). The update is expected to debut in spring 2026 with iOS 19 and macOS 16, and would potentially allow for more complex, multistep tasks like editing and sending a photo with a single voice command.

Apple is reportedly finalizing a deal to pay Alphabet's Google about $1 billion a year to use a custom version of its Gemini AI model to improve the Siri voice assistant. Apple plans to use a custom 1.2 trillion parameter AI model from Google. This model is more powerful than its current in-house models. Apple reportedly views this collaboration as a temporary measure to catch up in the generative AI race. The company is developing its own powerful 1 trillion parameter cloud-based AI model and hopes to have it ready by late 2026 to eventually replace Google's technology.

Rachel Warren has positions in Alphabet and Apple. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool has a disclosure policy.