Severance's Fame is Good for Apple TV+: Is it True for AAPL Stock?

Group 1: Apple TV+ Performance - Apple TV+ has achieved significant viewership success with the second season of Severance, becoming the most-viewed series on the platform since its release [1] - Despite the success of shows like Severance and Ted Lasso, Apple TV+ has a limited content library compared to competitors like Netflix, Amazon, and Disney, which is impacting its profitability [2] - The service is reportedly losing over $1 billion annually, with approximately 45 million subscribers as of 2024 [2][3] Group 2: Financial Overview - Apple's overall financial health remains strong, with a cash balance of$141.37 billion as of December 28, 2024, and modest content spending of $100 million or less on a dozen movies annually [3] - The Services portfolio, which includes Apple TV+, has become a key growth driver, with a 14$69.14 billion in the first quarter of fiscal 2025 [7] - Despite a decrease in Greater China sales by 11.1%, Apple has seen strong performance in emerging markets like India, where the iPhone was the top-selling model [8] - The active installed base of iPhones has reached an all-time high, with record upgrades reported in the quarter [7] Group 4: Apple Intelligence and Competitive Landscape - Apple has launched Apple Intelligence features, expanding availability to several countries, which is expected to enhance iPhone upgrades and installed base growth [9] - However, delays in improvements to Siri, now pushed to 2026, raise concerns about Apple's competitive position against rivals like Microsoft and Google [18] - The underwhelming performance of Apple Intelligence could hinder growth prospects for Apple's core product lines, including iPhone, iPad, and Mac [19] Group 5: Stock Valuation and Market Sentiment - The Zacks Consensus Estimate for Apple's fiscal 2025 earnings has slightly decreased, indicating a growth expectation of 7.56% from fiscal 2024 [10] - AAPL stock is currently trading at a forward P/E of 27.85X, which is above the sector average of 23.92X, suggesting a stretched valuation [12] - The stock is trading below its 50-day and 200-day moving averages, indicating a bearish trend in the market [15]