Apple Inc. (NASDAQ: AAPL) has laid off a portion of its Fitness+ team while reassessing the future of its fitness subscription service, signaling a strategic shift in priorities for this online workout platform. The restructuring of Fitness+ represents a strong signal that Apple is optimizing resources and its service portfolio, aiming to accelerate growth toward the premium-priced foldable iPhone and the Apple Intelligence initiative, which stands as a core future growth theme.
According to media reports, the job cuts affected a small number of employees in the audio division, though the exact savings and budget reallocation have not been disclosed. A more significant development is that fitness content may be more deeply integrated with the Health app, as Apple has announced plans to release a new version of Health powered by Apple Intelligence this year, linking health data, personalized insights, and customized fitness education content. If the Fitness+ integration continues, it could reduce fragmented content spending, allowing data collected by the Apple Watch to be more effectively converted into daily service experiences on iPhone and other Apple devices, thereby boosting device engagement and subscription retention.
A more substantial growth catalyst for future earnings will undoubtedly be the high-end product mix upgrade brought by the expensive foldable iPhone and the new wave of iPhone replacement demand driven by on-device and cloud-based AI reasoning experiences. The iPhone Duo, already unveiled, starts at $1,999, features a 7.6-inch internal display, and supports side-by-side operation of two apps, effectively adding a higher-priced product tier. For the foldable form factor, Apple's AI ecosystem can leverage the larger display space to allow users to view information on one side while interacting with Siri, Apple's AI-powered voice assistant, on the other. Personal context understanding and cross-app operations enhance multitasking efficiency, thereby increasing the practical value of the high-priced device.
Fitness Subscription Adjustments, New iPhone Lineup, and AI Strategy Draw Market Attention
Media reports citing insiders indicate that Apple is considering a redesign of its Fitness+ subscription service. The sources said that while reassessing the future of Fitness+, the company has laid off some employees in that division, indicating a potential shift in the platform's development focus. Overall, the layoffs implemented last week affected staff in the Fitness+ audio business, including content such as "Time to Walk" and "Time to Run," which users can listen to via Apple Watch without watching video. Apple's stock fell 0.2% in overnight trading before Monday. Over the past week, Apple shares gained 1.2%, a period that also included the major launch of the new iPhone 18 Pro and the foldable iPhone products.
Apple will not discontinue these audio offerings, though media reports suggest that the frequency of new content releases is expected to decrease. Within the company, the latest layoffs are reportedly viewed as a potential starting point for broader cost-cutting and Fitness+ adjustments over the coming months and years. Apple has been reassessing Fitness+ since earlier this year, as the service competes intensely with AI-based fitness platforms like Peloton. One potential direction is to integrate Fitness+ more deeply into the revamped Health app, which Apple is already preparing for a significant overhaul, including adding video content that explains health topics and personal benchmarks.
Meanwhile, Apple's latest iPhone lineup, including the new iPhone Duo, has become a key focus for investors and analysts following its release. The Duo marks Apple's entry into the foldable smartphone market and is positioned as a significant new product form factor rather than a short-lived experiment. As a result, the market is closely monitoring early reception for signals about Duo demand and Apple's overall iPhone strategy. Wall Street analysts are also actively evaluating whether this new form factor can spark a new upgrade cycle for Apple's most important product, especially as the company expands Apple Intelligence and AI capabilities.
On the Stocktwits platform, retail investor sentiment regarding Apple's stock price and fundamental growth has declined over the past week, sitting in "bearish" territory as of Monday morning. However, Apple shares have risen substantially by 23.3% so far this year.
Fitness+ Adjustments Optimize Internal Resource Allocation; Foldable and AI Redraw Apple's Growth Trajectory
The Fitness+ restructuring can be seen as a signal that Apple is optimizing resource allocation and its service portfolio, with support for the foldable and AI strategy primarily reflected in organizational efficiency and the increasingly coordinated expansion of Apple's consumer electronics ecosystem. Apple recently announced that it will launch a new version of Health powered by Apple Intelligence this year, connecting health data, personalized insights, and customized fitness education content. If the Fitness+ integration progresses, it is expected to reduce scattered content investment, allowing data collected by the Apple Watch to be more effectively transformed into daily service experiences on iPhone and other Apple devices, thereby increasing device stickiness and subscription retention.
A more significant catalyst for future performance is the high-end product mix upgrade brought by the foldable device and the new round of iPhone replacement demand driven by Apple's proprietary AI experience, which has been in development for years. In Apple's fiscal 2026 third quarter, iPhone and services revenue reached $54.252 billion and $30.739 billion respectively, together accounting for approximately 77.7% of total revenue. The iPhone Duo, already launched, starts at $1,999 with a 7.6-inch internal display and supports side-by-side dual-app operation, adding a higher-priced product tier for Apple. The financial transmission logic is as follows: increasing the proportion of higher-priced models lifts the average selling price, enhancing upgrade intent through new use cases, and then expanding services revenue opportunities through device retention. According to the official schedule, the Duo will be available for pre-order on October 16 and will go on sale on October 23, with these growth potentials being tested gradually as actual deliveries occur.
AI also offers Apple a new path to extend beyond hardware sales into recurring services revenue. Apple has indicated in official statements that some AI features relying on server-based models will offer paid expanded access in the future. This means AI's commercial contribution can manifest both as hardware upgrades and as higher usage tiers with ongoing service charges. From this perspective, the new growth combination worth watching for Apple is "foldable enhancing hardware value, AI expanding functional value and services monetization space." If the Fitness+ adjustment helps the company concentrate execution resources, its role is closer to improving efficiency for this overall strategy.
From an underlying architecture standpoint, Apple's AI services ecosystem explicitly adopts an on-device and cloud collaboration model: on-device AI handles tasks suitable for local execution, while Private Cloud Compute (PCC) handles more complex model requests in the cloud. Local models are compressed and quantized, combined with custom chips, balancing latency, memory usage, energy consumption, personal privacy, app coordination, and on-device personalization settings. PCC, on the other hand, runs larger models on servers equipped with Apple chips, expanding complex reasoning capabilities.
For the expensive foldable iPhone lineup, Apple's AI ecosystem is expected to serve as a significant product catalyst: the larger display space allows users to view information on one side while interacting with Siri on the other, and personal context understanding and cross-app operations enhance multitasking efficiency, thereby increasing the practical value of the high-priced device. This catalyst comes from the combination of "large-screen workspace plus AI task execution." AI simultaneously serves multiple compatible iPhones, but the Duo's differentiation lies in presenting these capabilities in a format better suited for parallel operation.
On Wall Street, the most optimistic price targets for Apple hover around the $400 mark, with the $400 target camp including Wedbush's Dan Ives and TD Cowen's Krish Sankar, implying these analysts see a potential gain of approximately 20% over the next 12 months for Apple, a company with a market value near $5 trillion. Ives' core bullish thesis is that Apple is poised to become the large-scale consumer gateway for AI, with roughly 2.5 billion active devices forming the AI distribution base. He projects that about 20% of the global population could use AI through Apple devices in the coming years. He further predicts that the commercialization of AI services and storage features could add approximately $15 billion in annual services revenue for Apple over the next few years.
TD Cowen's $400 target focuses more on product pricing power and hardware upgrades supporting profitability, particularly noting price increases across iPad, Mac, and future iPhones, as well as the 2-nanometer chip upgrade, which helps absorb some cost pressures. They add that the foldable provides a new reason for high-end upgrades, AI enhances the practical value of devices, and services commercialization extends the revenue contribution cycle per user. This line of reasoning centers on whether Apple can convert technological upgrades into revenue and profit growth through product differentiation and user loyalty.
Comments