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
18 months ago
"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
18 months ago
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
18 months ago

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
18 months ago

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
18 months ago
Apple needs to stop partnering with Google on anything.
Score: 12 Votes (Like | Disagree)
Ronald Reagan Avatar
18 months ago
Would definitely prefer to see DuckDuckGo as the default.
Score: 10 Votes (Like | Disagree)

Related Stories

Twitter Feature

Twitter's DM Search Bar Now Lets You Search the Content of Messages

Thursday March 24, 2022 3:01 am PDT by
Twitter has bolstered its search feature for direct messages so that users can now search their inbox using keywords and names to find the specific message they are looking for. The DM search bar isn't new, but previously it only allowed you to find the name of a person or a group chat in your inbox. The latest development means you can now refine searches to find particular content in your...
apple employees trio

Apple Giving Many U.S. Retail Employees Raises

Friday February 11, 2022 3:28 pm PST by
Apple is giving many of its U.S. retail employees raises ranging from two percent to 10 percent depending on location, reports Bloomberg. Salespeople, Genius Bar support staff, and some senior hourly workers are being granted pay increases. Apple is said to be boosting the pay of its retail employees because of inflation, the difficult labor market, and staff complaints about working...
iphone 13 and iphone 13 pro max

iPhone 13 Lineup Led Global Smartphone Revenues to Record High in 2021

Friday February 25, 2022 6:41 am PST by
Apple's iPhone 13 lineup led global smartphone revenues to a new high of $448 billion in 2021, Counterpoint reports. Smartphone revenues grew seven percent year-on-year and 12 percent quarter-on-quarter in the fourth quarter of 2021, despite difficulties caused by component shortages. Apple's iPhone revenue is believed to have increased 35 percent year-on-year to $196 billion in 2021, its...
Apple One Apps Feature

iCloud and Many Other Apple Services Are Down or Experiencing Issues [Resolved]

Monday March 21, 2022 9:55 am PDT by
Apple is experiencing a widespread outage today, with a wide range of the company's services and apps down or experiencing issues currently. Affected services and apps include the App Store, iCloud, Siri, iMessage, iTunes Store, Apple Maps, Apple Music, Apple Podcasts, Apple Arcade, Apple Fitness+, Apple TV+, Find My, FaceTime, Notes, Stocks, and many others, according to complaints across...
aapl 1q22 line

Apple Reports Record 1Q 2022 Results: $34.6B Profit on $123.9B Revenue

Thursday January 27, 2022 1:37 pm PST by
Apple today announced financial results for the first fiscal quarter of 2022, which corresponds to the fourth calendar quarter of 2021. For the quarter, Apple posted revenue of $123.9 billion and net quarterly profit of $34.6 billion, or $2.10 per diluted share, compared to revenue of $111.4 billion and net quarterly profit of $28.8 billion, or $1.68 per diluted share, in the year-ago quarter...
apple wallet drivers license feature

Apple Highlights Services in 2021, Recaps Upcoming Features Like IDs on iPhone

Monday January 10, 2022 10:00 am PST by
Apple today highlighted the continued growth and expansion of its services in 2021, including the App Store, Apple Music, Apple Maps, Apple Pay, Apple News, Apple Podcasts, Apple Fitness+, Apple TV+, Apple Arcade, and more. "Apple's world-class portfolio of services proved essential in 2021, as people worldwide sought new ways to keep entertained, informed, connected, and inspired," said...
apple park drone june 2018 2

Apple Is 'Ungodly Well-Managed,' Billionaire Investor Says

Friday February 18, 2022 5:23 am PST by
Apple has been lauded as "ungodly well-managed" by billionaire investor Charlie Munger, Yahoo Finance reports. In an exclusive interview, the Berkshire Hathaway vice chairman told Yahoo Finance Editor-in-Chief Andy Serwer:I think Apple is one of the strong companies and will stay a strong company. I think it's ungodly well-managed. Apple is now Berkshire Hathaway's largest stock holding,...
google one app

Google One Disappears From App Store a Day After VPN Launch [Update: Google One is Back in the App Store]

Wednesday February 2, 2022 12:01 pm PST by
The Google One app for iPhone and iPad appears to have mysteriously disappeared from the App Store this morning, and it is no longer available for download. As noted on Reddit, attempting to download the Google One app in the United States and Canada pops up an error message that says "App Not Available." It is not clear why the app has been removed from the App Store at this time, and...

Popular Stories

cook sept 2020 event

Gurman: Apple Preparing Pre-Recorded iPhone 14 and Apple Watch Series 8 Event

Sunday August 7, 2022 6:13 am PDT by
Apple has "started to record" its virtual September event, where it's expected to announce the upcoming iPhone 14 lineup, the Apple Watch Series 8, and a new "rugged" Apple Watch model, according to Bloomberg's Mark Gurman. Writing in his latest Power On newsletter, Gurman says the event, which is expected to take place in the early part of September, is already under production, implying...
Apple Watch Series 7 Starlight Midnight

Standard Apple Watch Series 8 Rumored to Feature Same Design as Series 7

Friday August 5, 2022 7:46 am PDT by
The standard 41mm and 45mm models of the Apple Watch Series 8 will feature the same design as the Apple Watch Series 7, according to Twitter user @ShrimpApplePro, who was first to reveal that iPhone 14 Pro models would feature a new pill-and-hole display. Titanium will not be an option for the standard Apple Watch Series 8 models either, according to @ShrimpApplePro, but Bloomberg's Mark...
iPhone 14 Lineup Feature Purple

Color Options for All iPhone 14 Models: Everything We Know

Monday August 8, 2022 3:59 am PDT by
The iPhone 14 and iPhone 14 Pro models are rumored to be available in a refreshed range of color options, including an all-new purple color. Most expectations about the iPhone 14 lineup's color options come from an unverified post on Chinese social media site Weibo earlier this year. Overall, the iPhone 14 and iPhone 14 Pro's selection of color options could look fairly similar to those of the ...
ios 16 beta 5 battery percent

iOS 16 Beta 5: Battery Percentage Now Displayed in iPhone Status Bar

Monday August 8, 2022 10:43 am PDT by
With the fifth beta of iOS 16, Apple has updated the battery icon on iPhones with Face ID to display the specific battery percentage rather than just a visual representation of battery level. The new battery indicator is available on iPhone 12 and iPhone 13 models, with the exception of the 5.4-inch iPhone 12/13 mini. It is also available on the iPhone 11 Pro and Pro Max, XS and XS Max, and...
iphone 14 pro max camera bump compared lipilipsi 16 9

Bigger iPhone 14 Pro Max Camera Bump Shown Alongside iPhone 13 Pro Max

Monday August 8, 2022 4:33 am PDT by
The camera bump on the upcoming iPhone 14 Pro Max is expected to be the largest rear lens housing Apple has ever installed on its flagship smartphones, and a new photo offers a rare glimpse at just how prominent it is compared to Apple's predecessor device. iPhone 14 Pro Max dummy (left) vs iPhone 13 Pro Max All iPhone 14 models are expected to see upgrades to the Ultra Wide camera on the...
ipad pro magic keyboard white

Rumor Claims Next iPad Pro to Feature New Four-Pin Smart Connector

Sunday August 7, 2022 11:57 am PDT by
A new rumor claims that the next-generation 12.9-inch and 11-inch iPad Pro will feature a new four-pin Smart Connector, an update from the current three-pin connector in the iPad Pro. The rumor from Mac Otakara, citing "reliable sources," says that the next iPad Pro, expected to debut possibly as soon as this fall, will feature a new Smart Connector that has four-pins rather than three. The...