AAPLApple Inc.

Apple makes consumer hardware, and its profit rests on the loop between those devices and the services that live on them.

The iPhone is the core of the business: it accounts for roughly half of sales, and its replacement cycle shapes the entire year. Mac, iPad, Watch and AirPods sit around the phone and sell mostly to people already inside the ecosystem, which makes them steadier than consumer electronics generally. Manufacturing is outsourced, largely to Asia; Apple keeps design, its own M-series silicon and the retail channel.

The second engine is Services — the App Store, iCloud, music, subscriptions and payments, plus the fee Google pays to be the default search engine. This segment grows faster than hardware and carries a markedly higher gross margin, so its share of profit exceeds its share of revenue. Investors track it separately because it converts a one-off device purchase into a recurring payment.

The principal risks are regulatory and geographic. App Store commissions are contested in both the United States and Europe, the default-search payments sit inside antitrust proceedings, and both the supply chain and a meaningful slice of demand run through China. The company has long returned nearly all free cash flow through buybacks and dividends.