What Does Apple Own? | The Motley Fool (2024)

Apple (NASDAQ:APPL) is one of the largest companies in the world, with a market capitalization of roughly $2.7 trillion in early 2024. It makes several top-selling technology products like the iPhone, Mac series, iPad, and Apple Watch. The company also has a growing services business, including its App Store, Apple TV+, and Apple Pay.

Apple built many of its products and services by investing heavily in . However, Apple buys other companies from time to time. It primarily buys startups to acquire talent (it famously re-acquired the services of co-founder Steve Jobs) and technology rather than an operating business with salable products.

However, Apple has acquired several companies over the years that have been crucial to its product development. Here's a look at some of the notable companies it now owns and some that it could look to acquire in the future. Learning what Apple does and the companies it owns is a key aspect of investment research for those seeking to learn how to invest money in its stock.

List of companies

What companies does Apple own?

Apple is one of the largest technology companies in the world. However, it is a relatively straightforward business. It has organized its operations around its two revenue sources:

• Products: Apple sells several branded products, including its iPhone, Mac series, iPad, Apple Watch, AirPods, Beats, Vision Pro, and Apple TV.
• Services: The company also has a growing services business, including advertising, AppleCare, cloud services, digital content (e.g., App Store, Apple Music, Apple TV+), and payment services (including Apple Card and Apple Pay).

Apple makes most of its money selling products ($298 billion, or 77%, of its $383.3 billion of revenue in fiscal 2023). However, its services are a meaningful profit center ($60.3 billion, or 36% of its total gross margin in 2023, thanks to a much higher gross margin of 70.8% versus 36.5% for products).

Although Apple has primarily built its business from the ground up over the years, it has acquired a few notable companies that have contributed to its growth, including:

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1. NeXT Software

Apple bought NeXT Software in 1997 for $427 million. The company developed hardware and software programs, including an operating system. However, the deal was more about acquiring talent by bringing co-founder Steve Jobs back to Apple (he founded NeXT in 1985, shortly after his removal from Apple). Jobs would go on to revitalize Apple by spearheading the development of the iPhone.

2. Siri Inc.

Apple bought Siri in 2010 for an undisclosed amount. Apple has integrated Siri's voice-activated personal assistance technology into most of its products, enabling customers to do everyday tasks like sending a text message or searching for something on the internet through voice commands.

3. AuthenTec

The company bought mobile security company AuthenTec in 2012 for $356 million. AuthenTec developed fingerprint sensor technology. The purchase provided Apple with the sensor technology to improve the security of its products and opened the door for it to enter the mobile payments market.

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4. Beats Music and Beats Electronics

Apple bought subscription streaming music service Beats Music and popular headphone, speaker, and audio software company Beats Electronics from co-founders Jimmy Iovine and Dr. Dre in 2014. At $3 billion, it was Apple's biggest-ever acquisition. The purchase bolstered the company's products business (Beats headphones) and services segment (Apple Music).

5. Shazam

Apple bought Shazam in 2018 for about $400 million. The music recognition startup enhanced the music identification system built into Siri and its Apple music platform.

6. Intel's smartphone modem business

Apple bought the majority of Intel's (INTC 0.95%) smartphone modem business in 2019 for $1 billion. The deal enabled the company to acquire patents for current and future wireless technology. It helped Apple expedite the development of future products.

Potential acquisitions

What companies could Apple buy in the future?

Apple has bought a lot of companies over the years. However, most of its deals have been smaller purchases of talent and technology. Beats has been its biggest acquisition at $3 billion -- a drop in the bucket for the multitrillion-dollar technology titan.

The company has the financial firepower to acquire almost anything it would want to buy. Apple ended its fiscal first quarter of 2024 with $172.6 billion in cash against $108 billion in debt. The company is also a cash-flow machine. It produced $40 billion in operating cash flow during the period, returning $27 billion to shareholders through dividends and repurchases.

Despite its massive cash war chest, Apple will likely continue to focus on smaller deals. A recent focus has been on artificial intelligence (AI) startups, with the tech giant buying dozens over the past year. The acquisition spree will likely continue, with most deals falling under the radar of investors.

However, CEO Tim Cook has said in the past that Apple looks at many opportunities, including large ones. While it hasn't found the right one yet, Cook hasn't ruled out a mega deal. With that in mind, here are some companies analysts have speculated it might buy if it opted to use its financial firepower on a major deal.

Electric vehicles

One potential avenue it could explore is buying an electric car company. Apple abandoned the pursuit of building an electric vehicle (EV) after shutting down its Project Titan in 2024 due to cost overruns and a lack of progress. The company had poured a reported $10 billion into the project to develop a fully autonomous vehicle. Pulling the plug on the project has led analysts to speculate it might instead turn its attention to buying a company that has already developed an EV.

The company has lots of options. It could buy an EV startup like Rivian (NASDAQ:RVIN) or Lucid (LCID -3.22%). Like most startups, these companies are burning through cash as they develop and launch new products, so they could benefit from becoming part of a more deep-pocketed company like Apple.

Another option is to go big by acquiring the industry leader, Tesla (TSLA 2.78%). While Apple couldn't buy the automaker and technology company with cash, given Tesla's mammoth market cap of more than $500 billion, it could certainly afford the deal by using its stock. However, it might not be easy to convince the company's shareholders or its leader, Elon Musk, to sell. Musk would rather operate Tesla as a private company than as a publicly traded company or unit of a public company.

Streaming content and VR

Given that Apple abandoned its pursuit of developing a car, it might shift its focus to growing one of its existing product or service lines. If it wants to make a needle-moving deal, it has lots of other options. For example, it could acquire a content company like Disney (DIS 0.47%) or Paramount Global (PARA 1.64%).

Disney would be an interesting fit. It has a growing streaming empire (Disney+, Hulu, and ESPN+) that Apple could add to its services business, which also includes streaming service Apple TV+. Apple wants to get more into live sports, which makes ESPN a potential strong strategic fit. It could combine all those services into a cable-like package. Another way Disney could fit within Apple is to create more immersive experiences by leveraging its virtual reality (VR) expertise. The company launched its Vision Pro VR headset in 2024. It could add immersive content from Disney to that platform, like Star Wars and Avatar-type virtual worlds. Meanwhile, Apple could eventually use its VR technology to create immersive experiences at Disney parks and resorts.

Paramount Global would offer Apple another way to grow its services business. The company owns several premier content brands, including CBS and Nickelodeon. It also has a streaming service (Paramount+) and expertise in live sports.

Financial technology

Another potential acquisition option is to expand its payment services capabilities by purchasing a company like PayPal (PYPL 0.72%). The financial technology company owns its namesake payment platform and Venmo. It also owns the Honey shopping extension. Acquiring PayPal would significantly expand Apple's payment services business.

Fitness

Apple has also gotten into the fitness sector through wearable technology (Apple Watch) and its Apple Fitness+ service. It could expand both categories by acquiring a fitness product and service company like Peloton (NASDAQ:PLTN). An acquisition of Peloton would give Apple a large installed user base (3 million) to grow its health platform. It could potentially offer integrated health and fitness products and services with the Apple Watch, Vision Pro, and Peloton.

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The bottom line on companies Apple owns

Apple has bought a lot of companies over the years. Most of its deals have been to acquire talent or technology, not products. It will likely continue with that strategy.

However, the company has the financial fortitude to make a needle-moving deal. It could consider many pathways, depending on what aspect of its business it wants to beef up through an acquisition. A deal could enhance shareholder value, especially if it accelerated Apple's growth rate by adding another high-margin service business to its ecosystem that could further enhance Apple's appeal as a great stock to buy and hold for the long term.

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