Apple CEO Tim Cook (C) joins customers during Apple’s iPhone 16 launch in New York on September 20, 2024.
Timothy A. Clary | Afp | Getty Images
Apple’s second-largest division after the iPhone has turned into a $100 billion a year business that Wall Street loves.
In Apple’s earnings report on Thursday, the company said it reached just under $25 billion in services revenue, an all-time high for the category, and 12% growth on an annual basis.
“It’s an important milestone,” Apple CFO Luca Maestri said on a call with analysts. “We’ve got to a run rate of $100 billion. You look back just a few years ago and the the growth has been phenomenal.”
Apple first broke out its services revenue in the December quarter of 2014. At the time, it was $4.8 billion.
Apple’s services unit has become a critical part of Apple’s appeal to investors over the past decade. Its gross margin was 74% in the September quarter compared to Apple’s overall margin of 46.2%.
Services contains a wide range of different offerings. According to the company’s SEC filings, it includes advertising, search licensing revenue from Google, warranties called AppleCare, cloud subscription services such as iCloud, content subscriptions such as the company’s Apple TV+ service, and payments from Apple Pay and AppleCare.
On a January 2016 earnings call, when the reporting segment was relatively new, Apple CEO Tim Cook told investors to pay attention.
“I do think that the assets that we have in this area are huge, and I do think that it’s probably something that the investment community would want to and should focus more on,” Cook said.
Over the years, Apple has compared its services business to the size of Fortune 500 companies, which are ranked by sales, to give a sense of its scale. After Thursday, Apple’s services business alone, based on its most recent run rate, would land around 40th on the Fortune 500, topping Morgan Stanley and Johnson & Johnson.
Services appeals to investors because many of the subscriptions contained in it are billed on a recurring basis. That can be more reliably modeled than hardware sales, which will increase or decrease based on a given iPhone model’s demand.
“Yes, the the recurring portion is growing faster than the transactional one,” Maestri said on Thursday.
Apple’s fourth-quarter results beat Wall Street expectations for revenue and earnings on Thursday, but net income slumped after a one-time charge as part of a tax decision in Europe. The stock fell as much as 2% in extended trading.
Apple boasts to investors that its sales from Services will grow alongside its installed base. After someone buys an iPhone, they’re likely to sign up for Apple’s subscriptions, use Safari to search Google, or buy an extended warranty.
Apple also cites a “subscription” figure that includes both its first-party services, such as Apple TV+ subscriptions, and users who sign up to be billed by an App Store app on a recurring basis.
The company said the installed base and subscriptions hit all-time-highs, but didn’t give updated figures. Apple said it had 2.2 billion active devices in February, and in August said it had topped 1 billion paid subscriptions.
Still, Apple faces questions about how long its services business can continue growing at such a rapid rate. Between 2016 and 2021, the unit sported significantly higher growth, reaching 27.3% at the end of that stretch.
In fiscal 2023, services growth dropped to 9.1% for the year, before recovering to about 13% the next year. Apple told investors that it expected services growth in the December quarter to be about what it was in fiscal 2024.
Cook was asked on Thursday what Apple could do to make some of its services and its Apple One subscription bundle grow faster.
“There’s lots of customers to try to convince to take advantage of it,” Cook said. “We’re going to continue investing in the services and adding new features. Whether it’s News+ or Music or Arcade, that’s what we’re going to do.”
A United Launch Alliance Atlas V rocket is shown on its launch pad carrying Amazon’s Project Kuiper internet network satellites as the vehicle is prepared for launch at the Cape Canaveral Space Force Station in Cape Canaveral, Florida, U.S., April 28, 2025.
Steve Nesius | Reuters
United Launch Alliance on Monday was forced to delay the second flight carrying a batch of Amazon‘s Project Kuiper internet satellites because of a problem with the rocket booster.
With roughly 30 minutes left in the countdown, ULA announced it was scrubbing the launch due to an issue with “an elevated purge temperature” within its Atlas V rocket’s booster engine. The company said it will provide a new launch date at a later point.
“Possible issue with a GN2 purge line that cannot be resolved inside the count,” ULA CEO Tory Bruno said in a post on Bluesky. “We will need to stand down for today. We’ll sort it and be back.”
The launch from Florida’s Space Coast had been set for last Friday, but was rescheduled to Monday at 1:25 p.m. ET due to inclement weather.
Read more CNBC tech news
Amazon in April successfully sent up 27 Kuiper internet satellites into low Earth orbit, a region of space that’s within 1,200 miles of the Earth’s surface. The second voyage will send “another 27 satellites into orbit, bringing our total constellation size to 54 satellites,” Amazon said in a blog post.
Kuiper is the latest entrant in the burgeoning satellite internet industry, which aims to beam high-speed internet to the ground from orbit. The industry is currently dominated by Elon Musk’s Space X, which operates Starlink. Other competitors include SoftBank-backed OneWeb and Viasat.
Amazon is targeting a constellation of more than 3,000 satellites. The company has to meet a Federal Communications Commission deadline to launch half of its total constellation, or 1,618 satellites, by July 2026.
Thomas Kurian, CEO of Google Cloud, speaks at a cloud computing conference held by the company in 2019.
Michael Short | Bloomberg | Getty Images
Google apologized for a major outage that the company said was caused by multiple layers of flawed recent updates.
The company released an incident report late on Friday that explained hours of downtime on Thursday. More than 70 Google cloud services stopped working properly across the globe, knocking down or disrupting dozens of third-party services, including Cloudflare, OpenAI and Shopify. Gmail, Google Calendar, Google Drive, Google Meet and other first-party products also malfunctioned.
“We deeply apologize for the impact this outage has had,” Google wrote in the incident report. “Google Cloud customers and their users trust their businesses to Google, and we will do better. We apologize for the impact this has had not only on our customers’ businesses and their users but also on the trust of our systems. We are committed to making improvements to help avoid outages like this moving forward.”
Thomas Kurian, CEO of Google’s cloud unit, also posted about the outage in an X post on Thursday, saying “we regret the disruption this caused our customers.”
Google in May added a new feature to its “quota policy checks” for evaluating automated incoming requests, but the new feature wasn’t immediately tested in real-world situations, the company wrote in the incident report. As a result, the company’s systems didn’t know how to properly handle data from the new feature, which included blank entries. Those blank entries were then sent out to all Google Cloud data center regions, which prompted the crashes, the company wrote.
Engineers figured out the issue in 10 minutes, according to the company. However, the entire incident went on for seven hours after that, with the crash leading to an overload in some larger regions.
As it released the feature, Google did not use feature flags, an increasingly common industry practice that allows for slow implementation to minimize impact if problems occur. Feature flags would have caught the issue before the feature became widely available, Google said.
Going forward, Google will change its architecture so if one system fails, it can still operate without crashing, the company said. Google said it will also audit all systems and improve its communications “both automated and human, so our customers get the information they need asap to react to issues.”
AMD CEO Lisa Su unveils the AMD vision for Advancing Al.
Courtesy: AMD
Shares of Advanced Micro Devices rose nearly 9% on Monday after analysts at Piper Sandler lifted their price target on the stock on optimism about the chipmaker’s latest product announcement.
The analysts said they see a snapback for AMD’s graphics processing units, or GPUs, in the fourth quarter. That’s when they expect the chipmaker to be through the bulk of the $800 million in charges that AMD said it would incur as a result of a new U.S. license requirement that applies to exports of semiconductors to China and other countries.
Last week, AMD revealed its next-generation artificial intelligence chips, the Instinct MI400 series. Notably, the company unveiled a full-server rack called Helios that enables thousands of the chips to be tied together. That chip system is expected to be important for AI customers such as cloud companies and developers of large language models.
AMD CEO Lisa Su showed the products on stage at an event in San Jose, California, alongside OpenAI CEO Sam Altman, who said they sounded “totally crazy.”
“Overall, we are enthused with the product launches at the AMD event this week, specifically the Helios rack, which we think is pivotal for AMD Instinct growth,” the analysts wrote in their note.
Piper Sandler raised its price target for AMD’s share price from $125 to $140.
The stock jumped past $126 on Monday to close at its highest level since Jan. 7, before President Donald Trump announced sweeping new tariffs and AMD warned of the chip control charges.