Could Apple help you retire a millionaire?

Apple (AAPL -0.34%) had a slow start to the year, with its shares down 12% in early May. Declining product sales, poor market conditions and an uncertain position in the nascent artificial intelligence (AI) market have caused investors to pull back.

However, the tech giant has since turned things around, with its shares up 34% since May 1. Apple won back Wall Street, beating expectations in the third quarter of 2024 and with announcements that hint at an exciting future in AI. In Q3 2024 (ended June 29), the company’s revenue rose 5% year over year, beating analysts’ forecasts by $1.4 billion. The quarter benefited from a 24% increase in iPad sales and a 14% increase in services revenue.

In terms of artificial intelligence, Apple is preparing to make a massive push into the industry with the launch of the iPhone 16 in September and the release of Apple Intelligence — a generative overhaul of its operating systems.

Apple shares have risen more than 177,000% since going public in 1980, benefiting from the success of market-changing products such as the first iPhone. The company’s meteoric rise over the years might lead some analysts to wonder if its stock may have much more to offer. However, Apple is entering a new chapter in its AI history and could enjoy major gains as its technology develops.

So here’s why Apple could help you retire a millionaire with the right investment.

Apple could be gearing up for a profitable turnaround in its product lineup

At the end of August, Apple revealed the date for its highly anticipated iPhone call. The event will take place on September 9, announced with the tagline “It’s Glowtime” – presumably a reference to its AI theme.

The company stepped up its expansion into AI this year, announcing Apple Intelligence in June, and now it’s preparing to launch its iPhone 16. The new smartphone will be Apple’s first designed with AI in mind, and the company has invested billions to get there . The tech giant’s research and development (R&D) has reached $8 billion in 2024, up 10% from last year.

Data by YCharts

This chart shows that Apple spent nearly 10% of its total sales last year on research and development, a 20-year high. In fact, the last time its research and development was this high, Apple was preparing to release the first iPhone and revolutionizing the music business with the iPod. And its stock is up 60,000% since then.

While it might be worrisome for investors to see the company spending so much on AI, it also begs the question: What does Apple have up its sleeve? The tech giant isn’t always the first to move into an industry. It has a reputation for gradually approaching a new market, then coming out and stealing the show by quickly rising to dominance.

Products like smartphones, tablets, headphones and smartwatches were all run by different companies before Apple landed on the scene. Meanwhile, market share in each of these industries quickly returned to Apple with the release of products such as the iPhone, iPad, AirPods and Apple Watch.

Apple’s free cash flow hit $104 billion in 2024, indicating it has the funds to continue investing in AI and catch up with its rivals. As a result, now could be a great time to invest before its stock soars over the next decade.

More ways to monetize its AI efforts

Companies like Microsoft, Amazonand Alphabet focus mainly on the business side of AI, investing heavily in their respective cloud platforms. However, Apple has a unique opportunity to dominate the consumer sector. The popularity of its various products and the potential to add paid AI services to its library of subscription-based digital platforms could help it carve out a profitable role in the industry.

Data by YCharts

Over the past five years, service revenue growth has massively outpaced all of Apple’s other segments (as seen in the chart above). Services is on track to surpass the iPhone in total revenue to become the company’s highest-grossing business; an AI upgrade of its products could encourage millions of product upgrades. Meanwhile, new generative services could help Apple make money from those products for years.

Apple’s earnings are forecast to reach just over $8 per share by fiscal 2026. Multiplying that figure by its forward price-to-earnings (P/E) ratio of 34 results in a share price of $285, projecting an increase of shares of 25% in the next two fiscal years. Consequently, holding the stock for a decade or two could help a sizable investment exceed that million dollars by retirement.

Apple has significant potential and is a compelling buy for long-term investors.