Apple's Search Engine Deal With Google Expected to Drive Services Revenue Growth Through 2022

Morgan Stanley analyst Katy Huberty today raised her services-related revenue forecast for Apple through the 2022 fiscal year.

applegoogle
In a research note shared with MacRumors, Huberty said stronger licensing revenue is the primary driver of the raised estimates, including an acceleration in the search traffic-related payments Apple receives from Google. The New York Times last year reported that Apple receives an estimated $8-12 billion per year in exchange for making Google the default search engine on devices like the iPhone and iPad.

"Following strong March quarter App Store results and an analysis of the key drivers of Apple's Licensing & Other segment, we raise our already above-street FY21 and FY22 Services revenue estimates by 3% and 5% respectively, and are increasingly convinced that consensus Services forecasts over the next 2+ years are too low," wrote Huberty.

Despite the positive outlook on Apple's services, Huberty lowered her 12-month price target for Apple to $155 from $164 per share.

"However, multiple compression over the last 2 months, primarily at Apple's higher growth Services peers, more than offsets our higher revenue and earnings estimates, driving our new sum-of-the-parts based price target to $156, or 33x FY22 EPS, down from $164 previously," wrote Huberty.

Apple's service portfolio includes the App Store, Apple Music, Apple TV+, Apple News+, Apple Fitness+, Apple Arcade, iCloud, and more.

Top Rated Comments

mannyvel Avatar
5 days ago at 07:41 am
"We care about your privacy, but not quite as much as we care about google's cash injector."
Score: 28 Votes (Like | Disagree)
Piggie Avatar
5 days ago at 07:43 am
Apple "Privacy is our 100% most important focus as a company"

Google "Have a ton of money Apple"

Apple "Ok, that seems to have helped us change our mind in this case"

Amazing really isn't it that Tim Cook can sit there, say what he says whilst keeping a straight face and yet still carries on like this.
Score: 20 Votes (Like | Disagree)
MacStreamer Avatar
5 days ago at 08:02 am

Does somehow the internet magically change because google gives apple a dollar?
I don't have a problem using anything Google, but we have tons of members who love to dump on Google at every turn while blindly defending Apple. Some members are just pointing out the hypocrisy in Apple's righteous privacy sermon by using this deal as an exampe.
Score: 17 Votes (Like | Disagree)
KidAKidB Avatar
5 days ago at 07:46 am

Apple needs to stop partnering with Google on anything.
Why? Google's by far the best search engine and Apple wants the best user experience.
Score: 14 Votes (Like | Disagree)
Picklefoot Avatar
5 days ago at 07:18 am
Apple needs to stop partnering with Google on anything.
Score: 12 Votes (Like | Disagree)
Ronald Reagan Avatar
5 days ago at 07:45 am
Would definitely prefer to see DuckDuckGo as the default.
Score: 10 Votes (Like | Disagree)

Top Stories

samsung experience 1

Samsung's 'iTest' Lets You Try a Galaxy Device on Your iPhone

Thursday April 8, 2021 12:42 pm PDT by
Samsung has launched "iTest," an interactive website experience that's designed to allow iPhone users to test out Android on a Galaxy device, or "sample the other side," as Samsung puts it. Subscribe to the MacRumors YouTube channel for more videos. The iTest website is being advertised in New Zealand, according to a MacRumors reader who came across the feature. Visiting the iTest website on...
sonny 2021 ipad mini pro dummies

Leaked Dummy Units Show iPad Mini 6 With Thick Bezels and Home Button, New iPad Pro Models

Thursday April 8, 2021 2:11 am PDT by
Rumors suggest Apple will release refreshed versions of the iPad mini and iPad Pro models in the first half of this year, potentially as soon as this month, and a new leak today has provided us with a possible preview of what to expect in terms of the devices' overall design and camera prospects. Tech leaker and Apple blogger Sonny Dickson this morning shared images on Twitter showing dummy ...
iMessage Android featured

Apple's Rationale for Not Bringing iMessage to Android Revealed in Legal Documents

Friday April 9, 2021 2:22 am PDT by
It's no secret that Apple sees iMessage as a big enough selling point to keep the service exclusive to Apple devices, however new court filings submitted by Epic Games in its ongoing lawsuit with the company reveal just how Apple executives have rationalized their decision not to develop a version of iMessage for Android. Apple clearly recognizes the power that iMessage has to keep users...
fake airpods 3

Counterfeit 'AirPods 3' Hit the Market Prior to Official Announcement

Friday April 9, 2021 2:45 am PDT by
Apple is expected to launch the third iteration of AirPods in the third quarter of this year. Rumors and reports suggest the new AirPods will feature an updated design more in line with the AirPods Pro, but lacking in "Pro" features such as active noise cancellation. Despite AirPods 3 not yet being officially announced by Apple, counterfeit products of the unreleased earbuds have already hit ...
nba tracking prompt orange

Two-Thirds of iPhone Users Expected to Block Ad Tracking

Friday April 9, 2021 7:19 am PDT by
As many as 68 percent of iPhone users are expected to deny advertisers permission to track them thanks to Apple's App Tracking Transparency feature, in what is beginning to look like a significant blow to the advertising industry (via AdWeek). With the launch of iOS 14.5, apps will have to receive explicit user permission before accessing an iPhone's advertising identifier or IDFA, which is...
iPhone 13 Battery Life Feature

DigiTimes: iPhone 13 Pro Models to Feature 120Hz ProMotion Refresh Rate and 15-20% Less Power Consumption

Friday April 9, 2021 12:52 am PDT by
The two premium "Pro" models of the upcoming iPhone 13 lineup will be equipped with a low-power LTPO display, enabling the iPhones to have a 120Hz refresh rate, according to industry sources cited by Taiwanese publication DigiTimes. According to today's paywalled report, Apple suppliers Samsung and LG Display are in the process of converting parts of their production capacity to produce LTPO ...
ipad pro and macbook pro

iPad and MacBook Production Reportedly Delayed Due to Global Chip Shortage

Thursday April 8, 2021 2:31 am PDT by
Apple is facing a global shortage of certain components for some of its MacBook and iPad models, causing the Cupertino tech giant and its suppliers to postpone production of the products, according to a new report from Nikkei Asia. According to the report, MacBook production is being hindered due to the shortage of chips mounted onto the circuit board before final assembly, which is a key...
ehric

iPhone 12 Mini Missing From Top 5 Best Selling Smartphone List of January 2021

Friday April 9, 2021 4:58 am PDT by
According to market data compiled by Counterpoint Research, Apple's smallest iPhone since the 2016 iPhone SE, the iPhone 12 mini, struggled to obtain a spot in the top five list of best-selling smartphones in January of this year. According to the market data, the iPhone 12 mini came in eighth place for the best-selling smartphone worldwide in the first month of the year. However, the iPhone ...
tmobile 5g modem

T-Mobile Launches Unlimited 5G Home Internet for $60/Month

Wednesday April 7, 2021 2:18 pm PDT by
T-Mobile today hosted an Un-carrier event where the company announced the launch of a a new 5G home internet plan, which is priced at $60 per month and offers unlimited data. The service is available to more than 30 million Americans across much of the United States, including 10 million households in rural areas not typically able to access reliable broadband. Connectivity will be either 4G ...
apple find my network

Apple Announces Find My Network With Support for Third-Party Devices

Wednesday April 7, 2021 10:06 am PDT by
Apple today announced the launch of its Find My network accessory program, which is designed to allow third-party Bluetooth devices to be tracked in the Find My app right alongside your Apple devices. According to Apple, the first accessory companies to take advantage of the new Find My integration include Belkin, Chipolo, and VanMoof, with devices set to be available beginning next week. ...