What's going on?

Goldman Sachs added Apple to its �Conviction Buy� list. It says that investors are going to realise that Apple is a �service� company and not just a �hardware� company � and consequently could boost the stock price 43% over the next year. The news helped push�the stock up more than 3% on Wednesday.

What does this mean?

Goldman�s main point is that most investors think of Apple as a company that, primarily, sells smartphones. And to a large extent that�s true: sales of the iPhone still make up the majority of its profits. Investors are obsessed with how many iPhones it sells each quarter. But Goldman says that Apple is quickly becoming a �service� company as they roll out things like Apple Pay, Apple Music and Apple TV. The idea is, essentially, that Apple is going to start making a lot more money from its service �ecosystem� and investors haven�t realised that yet.

Why should I care?

1. The bigger picture: Goldman Sachs can move stock prices. Its report was the main reason that the stock added more than $15 billion in value on Wednesday. Not every Wall Street bank has such an impact on stock prices � but Goldman sure does.
2. For the stock:�Goldman says the stock is worth (a lot) more. Goldman said in its report that Apple�s stock could rise 43% in the next 12 months. There is, of course, no guarantee that will happen. But as a services company, the way Apple makes money becomes much �stickier,� e.g. you pay a monthly fee for Apple Music rather than having to be persuaded (again) every time you buy a new iPhone.�