This partnership makes complete sense for Hermes, as it associates them with the world's most valuable brand just as Millennials are entering their prime earning years and Gen Z is entering the workforce.
Speaking as a Millennial myself, who is happy to pay for designer goods if I care about the brand and like their designs and has a reasonable amount of disposable income from a tech job and crypto investments, basically the exact type of demographic you're referring to - the partnership between Apple and Hermes has certainly made me aware Hermes exists, but it hasn't made me want to drop cash on their goods because it's not a brand I've heard about anywhere else.
Other big designers like Gucci and LV seem to be doing a good job of marketing to the younger generations by getting their brands hyped by rappers. And it goes without saying that if I'm rocking something with Gucci written on it people will know what it is and that's a brand with hype and clout in my age group.
But if I tried to flex Hermes I doubt anyone would know what I was on about. As someone else brought up in another thread the first thought most people are likely to have when they hear the name Hermes (at least here in Britain) is the crappy cheap courier that's notorious for losing or damaging your parcels.
My mum, who is into designer stuff, is the only person I know who was aware of Hermes before they collaborated with Apple.
All this to say, it seems to me the intention of Hermes is not so much to aim at a younger audience, but rather to draw in existing fans of their brand who tend to be older than Millennials. Designer brands popular among Millennials are more like Gucci and LV. Both of those are namedropped by rappers all the time. That's how you get a brand to have clout, and therefore perceived value, among Millennials and Gen Z.
Also as a bit of a side note, streetwear brands are increasingly popular among younger fashion conscious consumers, and I think if Apple wanted to really aim at Millennials and Gen Z they could do a collab with Supreme for Apple Watch bands and other stuff. Plenty of rich kids would snap that shiz up no question about it.
When the Hermes collab started I hoped Apple would start adding collabs with other high end luxury brands as well, but it's been many years and this is yet to happen. Shame, too, because I would absolutely snap up a Gucci Apple Watch. Aside from the aforementioned clout, I like Gucci's whole design aesthetic and own a fair bit of Gucci stuff already. And from a business perspective it just seems like it is clearly mutually beneficial. No idea why it hasn't been done yet.
I imagine the hesitation is from Apple's side, as Gucci will happily sell you rather expensive iPhone cases already, as will most other designers.
As I hope is obvious from my tone and the fact I myself own Gucci products, none of this is intended to judge anyone who buys Hermes stuff. If anything it's quite the opposite. I'm honestly surprised that in all these years since Apple announced the initial collaboration with Hermes (pretty sure it was at the launch of the original Apple Watch, right?) that they haven't collaborated with other designers.
I want a Gucci Apple Watch and I'm perfectly able and willing to pay for it, c'mon Apple!