Apple’s fastest-growing business isn’t the iPhone — but that’s still what investors care the most about (AAPL)

Apple made 62% of its revenue from iPhones last year — but that segment is quickly losing ground to Services.
Services — like iTunes and the App Store — have grown by a third, the company said in its last earnings report.
However, UBS data show that iPhone sales are still at the front of investors’ minds.
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Apple sold a whopping 52.2 million iPhones during the second-quarter.

While that’s a huge number, one that netted the company $61 billion in revenue, more focus has been given recently to Apple’s Services businesses. That line — which has nothing to do with hardware and instead comprises of things like the App Store, iTunes, and Apple Music — has been growing faster than any other segment for the company.

Despite the 31% annual surge in Services revenue, investors are still laser focused on iPhone sales, according to new data from UBS.

The bank polled 158 institutional investors to see their biggest concerns relating to Apple’s stock. They were also asked how they viewed the stock. Here’s what they said:

Screen Shot 2018 06 14 at 2.45.57 PM

"We are often asked if investors now are looking beyond iPhone units," analyst Steven Milunovich said in a note to clients this week. "Not yet—or at least the 158 respondents don't believe their fellow investors have de-emphasized the primary generator of revenue. iPhone unit sales and ASP was ranked as the top issue by 56% of respondents."

Investors may not be focused on it yet, but Apple CEO Tim Cook is optimistic about the future of his company's services business.

"In terms of longer term, we're on target to our 2020 goal of doubling the services revenue of 2016," Cook said on the company's second-quarter earnings conference call. "Paid subscriptions passed 270 million, up 30 million in the last 90 days, contributing to the overall increase in services revenue."

Shares of Apple have risen 11% since the beginning of 2018, hitting $191.53 on Thursday. UBS says the stock could reach $210 this year "as investors gain confidence in annuity revenue streams and Apple's ability to monetize its growing ecosystem."

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