Apple Inc. (NASDAQ AAPL) shares have risen by 68.48% to $265.76 in 2019. This outpaces any stock in the Dow Jones industrial average by far. The Dow hit record territory Friday, up 20.05% to 28,004.89. Without such a huge rally in Apple’s shares, the Dow could not have breached 28,000.

The company’s latest earnings statement blew skeptics away. Apple recently posted earnings of $3.05 per share, up from $2.94 last year. Forecasts for the upcoming holiday quarter were strong. The iPhone 11 was only available for part of last quarter, so its sales results should improve in the current one.

Apple’s stock increase rode the back of two developments for most of the year. The new iPhone 11 has done better than expected, although the numbers are speculation by experts and not data provided by Apple. The other is that Apple’s bet on “services” as an alternative to rising hardware sales has gotten a boost from the belief of some investors in particular that its Apple TV+ streaming product will do well. Apple’s services business results crushed expectations for the latest quarter. Its revenue set a record at $12.5 billion, against total company revenue of $63 billion. Services as a percentage of total revenue is expected to continue to rise.

The release of the iPhone 11 in September was indeed the tonic the stock needed. It had sold down sharply in mid-summer after Apple announced its earnings for a quarter ago. The mainstay of revenue had continued to weaken as the iPhone X series did poorly, particularly in the world’s largest wireless market, China. The trade war between China and the United States also dragged on the stock, as anxiety about Apple supply chain interruptions grew. Apple sources many parts of the iPhone from companies in China. iPhone 11 sales were enough to alleviate any worry along these lines.

Apple’s management continues to make the case that its services business would replace the iPhone as the company’s growth engine. It was not an easy argument to make, up until the new figures came out.

The launch of Apple TV+ is critical to the new strategy. Apple already has a huge music store. Its app store is by far the largest in the industry. By some estimates, apps downloaded since the store began total more than 130 billion. Many experts believe that app sales cannot continue to grow at rates they have over the past decade. So video streaming becomes an essential part of the growth in this multimedia business.

All this means that Apple’s bet on TV is absolutely critical. At $4.99 for the first month, after a seven-day free trial, the service is aggressively priced compared to industry leaders Amazon and Netflix, which have price points of $12.99 a month. Apple’s management has gambled that, although its library of content is limited compared to the leaders, the low price, the Apple brand and the hundreds of millions of iPhones, iPads and Macs in the world are a huge base to which it can market its streaming service. A JPMorgan analyst recently said Apple TV+ and Apple’s ad business would add $25 billion in revenue in 2025.

Confidence has grown that Apple’s new iPhone 11 and services strategy is the right formula. Its market cap is back above a trillion to nearly $1.2 trillion. And it was recently named the most valuable brand in the world again.

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