Artificial Intelligence (AI) has opened up a whole new world of possibilities for new products and services that Apple (AAPL 1.03%) may hit the market. The latest iPhones will have the functionality needed to take advantage of the company’s new AI features, which it broadly refers to as “Apple Intelligence.” It’s just the catalyst the company may need to trigger a major upgrade cycle for its phones.

But increasing iPhone sales is only part of the equation. AI could provide another catalyst for Apple, and that’s on the services side.

Apple may charge a subscription fee for certain AI features

Not all AI features are created equal, and premium options may require users to pay a recurring fee. Many analysts believe the company could potentially charge as much as $20 per month for premium AI features.

Apple users, they argue, have become accustomed to paying for premium features and services through the company’s growing and vast ecosystem. New and improved AI features could be part of those premium features. Chatbots like ChatGPT, for example, are free for users, but a subscription is required for people who want a premium experience with faster and better access.

Apple Intelligence includes many of the features people can use with chatbots today, like composing emails and composing images. Apple’s Siri assistant will also get an upgrade thanks to AI. The company recently unveiled Apple Intelligence, and all of its features likely won’t be known until next year. By then, consumers may have a better idea of ​​which ones are free and which ones require a subscription.

Service revenues are becoming increasingly important for Apple

Over the years, Apple has expanded its services business to include music, news, streaming, podcasts, fitness, and other services. AI can enhance these existing services, but also function as a standalone service and serve as an assistant to users.

Services are an important part of Apple’s business. While a user may keep their iPhone for several years before upgrading, they must always pay an ongoing subscription for services to ensure uninterrupted use.

In the most recent quarter, which ended June 29, the company’s service revenues totaled $24.2 billion, up 14 percent year over year. That’s a much higher growth rate than the modest 2 percent increase in product sales, which totaled $61.6 billion. Today, service revenues account for 28 percent of Apple’s revenue. Five years ago, the company’s service revenues were just $11.5 billion for the quarter, accounting for 21 percent of total revenue.

The services business has grown significantly in importance for Apple in recent years and AI could potentially accelerate the growth of the business in the near future.

Is Apple stock a good buy?

Apple shares recently fell when it was announced that billionaire Warren Buffett was selling shares in the company. And while that may sound alarming, it is nothing to worry about for investors and certainly does not change the investment thesis behind buying Apple shares.

With a price-to-earnings ratio of more than 30 times, Apple is not a cheap stock, but given its strong customer base and potential to transform and accelerate business through AI, now may be a good time to add the stock to your portfolio. There could be not just one but several catalysts for business through AI, and if you’re willing to stick with it for the long term, this can be an excellent growth stock to buy today.