Services Rides on Apple TV and Arcade: What's Ahead for Apple Stock?

Apple AAPL has been riding on a strong Services business, driven by strong Apple TV content and an expanding Apple Arcade game portfolio. In fiscal 2025, the Services business accounted for 26.2% of net sales with revenues growing 14% year over year, better than 13% year-over-year growth in fiscal 2024. Strong Apple TV content and an expanding Apple Arcade game portfolio have been catalysts for the Services business over the past couple of fiscal years.

Apple’s endeavor to continuously expand its Arcade game portfolio is expected to keep subscribers engaged in the upcoming holiday season. The latest farming expansion, which is massive, is expected to keep players engrossed with Sneaky Sasquatch. SpongeBob: Patty Pursuit 2, PowerWash Simulator, Cult of the Lamb Arcade Edition, Subway Surfers+ and NARUTO: Ultimate Ninja STORM+ are the new games that joined Apple Arcade in December. Cozy Caravan, Sago Mini Jinja’s Garden, True Skate+ and Potion Punch 2+ are the new games set to join in January 2026.

Apple’s focus on expanding sports content is noteworthy. Beginning in 2026, all Major League Soccer (MLS) games will be available to stream for Apple TV subscribers at no additional cost. Apple TV has become the exclusive new broadcast partner for Formula 1 in the United States in 2026 under a five-year partnership. The introduction of Apple TV and the Peacock bundle from Oct. 20 is expected to drive subscriber base.

Apple Faces Tough Competition in Streaming Market

AAPL is facing stiff competition from the likes of Disney DIS and Netflix NFLX in the streaming space. 

Disney’s streaming services — Disney+ and Hulu — now reach 191 million subscribers. The launch of the standalone ESPN DTC service on Aug. 21, 2025, marks a major milestone in repositioning Disney’s ESPN as a fully digital sports powerhouse. Content investments in Marvel and Star Wars franchises are driving strong box office results for Disney.

Netflix has set an ambitious target to double its revenues by 2030 and reach a $1 trillion market capitalization, supported by a diversified content strategy, including international programming, live events, and gaming initiatives. For the fourth quarter, Netflix projects $11.96 billion in revenue with 16.7% growth and a 23.9% operating margin, featuring major releases including Stranger Things' final season and NFL Christmas games. Netflix raised its full-year free cash flow forecast to $9 billion from $8-8.5 billion.

AAPL’s Share Price Performance, Valuation & Estimates

Apple shares have jumped 39.7% in the past six-month period, outperforming the broader Zacks Computer and Technology sector’s return of 22.2%.

Apple Stock Beat Sector in 6 Months

The AAPL stock is trading at a premium, with a forward 12-month price/earnings of 32.98X compared with the broader sector’s 27.76X. AAPL has a Value Score of F.

AAPL Stock is Overvalued

The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $8.12 per share, up by 3 cents over the past 30 days, suggesting 8.9% growth from fiscal 2025’s reported figure. 
 

Apple Inc. Price and Consensus

Apple Inc. price-consensus-chart | Apple Inc. Quote

Apple currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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