Stock Analysis & Ideas

Apple Stock: Could VR/AR Unlock Growth?

Technology icon Apple (AAPL) could be hard at work on the hardware device that a majority of people use to “plug in” to the “metaverse” that many seem so excited about.

Undoubtedly, Meta Platforms (FB) seeks to dominate the next frontier of digital tech. After taking a sales growth hit from Apple’s latest privacy update, Zuckerberg likely envisions himself having the last laugh as he triumphs over Apple in what could be the next big technological shift. I remain bullish on Apple.

Apple’s Metaverse Push

Meta is not just looking for another growth driver to tack on to its social-media business. Its looking far into the future, perhaps too far for Wall Street’s liking.

Indeed, investors don’t appear to be fans of unchecked spending on initiatives not expected to churn a profit until many years down the road. Not while rates are on the rise.

I’d argue that Apple is likely to be a bigger winner than Meta, given its reputation for knowing when a particular next-generation technology is ready for the mainstream.

Apple didn’t invent the smartphone; it merely perfected it at the right time. The company also didn’t invent the tablet or smartwatch; it perfected it and became a leader in each respective consumer hardware industry. Undoubtedly, Apple seems to be the company to dictate what technology is ready to take us to new realms and which ones are not yet ready.

With a growing number of headlines focused on Apple’s rumored VR/AR headset, one can’t help but be excited for what the future holds. Like smartphones that came before iPhone, few firms could really get it right.

Right now, there are a wide range of headsets, from Valve Corporation’s Valve Index to Meta’s Oculus Quest. Many firms know the magnitude of the opportunity at hand, and they want a piece.

Although today’s lineup of headsets is intriguing, none are truly breakthrough as far as the overall experience is concerned.

Apple: Hardware and Software Expertise

In terms of top-of-the-line hardware and software, Apple is the firm to deliver. Unlike Meta, though, the company has done a pretty good job of maintaining its secrecy with its rumored headset and metaverse ambitions.

This will surely deliver on the shock and awe factor once Apple is ready to pull the curtain, not just on its device, but its operating system (could it be named realityOS?). Indeed, the VR/AR operating system could so be polished that consumers justify the hefty price tag of a premium VR/AR headset.

Although there’s no shortage of innovation and ambition going on at Meta, I do think that the firm will have a difficult time outdoing Apple on the hardware front, as it looks to make a jump from smartphones to headsets.

That said, on the software front, Meta is building a metaverse. Whether a majority of VR/AR users enter it, given Facebook’s questionable reputation, is another story.

In any case, Apple remains one of my top picks to play the future of the VR and AR, even if its rumored headset doesn’t arrive in early 2023 (around the same time as its WWDC conference), as outlets now expect.

Whenever it is ready, though, many Apple fans will probably be more than willing to make the jump. They trust Apple knows where the puck is headed next in consumer hardware.

Wall Street’s Take

According to TipRanks, AAPL stock comes in as a Strong Buy. Out of 28 analyst ratings, there are 23 Buy recommendations and five Hold recommendations.

The average Apple price target is $193.07, implying an upside of 15%. Analyst price targets range from a low of $161 per share to a high of $215 per share.

Bottom Line on Apple

While I do think an Apple headset will be a hot seller once it hits store shelves, it remains difficult to gauge when the product will actually be ready for launch.

Further, pricing is also a potential concern that could lead the initial headset to experience more of an Apple Watch-like gradual success, rather than an iPhone-like breakthrough success.

For now, I’d take any rumored release schedule of Apple’s AR/VR device with a fine grain of salt. Apple won’t launch until it’s ready. Apple doesn’t need to rush into the metaverse. Once it’s ready for Apple, it’ll probably be ready for the world.

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