Published - June 6th, 2023 @ 11:09 AM (CET)
Record High Amid Anticipation
Anticipating a groundbreaking announcement in the augmented and virtual reality (AR/VR) space, investors drove Apple stocks to an all-time high on Monday. This surge comes as the tech behemoth, worth almost $3 trillion, teases the unveiling of its mixed reality headset at the ongoing developers' conference. According to Bank of America, Apple is poised to "dominate" the burgeoning AR/VR industry with this speculated device.
Apple's Stock Performance
The value of Apple (NASDAQ:AAPL) stocks climbed by close to 2%, hitting a high of $184.36 on Monday, exceeding the previous high of $182.94 set on January 4, 2022.
As a testament to Apple's financial performance, the company's stocks have recorded
a 42% rise year-to-date and a 48% surge from its 52-week low at the start of this year.
Entering the AR/VR Market
With its current valuation of $2.89 trillion, Apple is believed to be on the brink of disrupting the AR/VR market with its device at this week's Worldwide Developers Conference. With this, Apple could lock horns with Meta Platform and its array of Quest AR/VR headsets.
Price and Application Speculations
While the AR/VR headset market has yet to gain full acceptance among consumers, Bank of America notes this trend could shift dramatically with Apple's entry, especially if the device debuts under the rumored $3,000 price point, accompanied by a selection of standout applications at launch.
Potential Surprises and Focus Areas
The general belief is that the headset would retail for $3,000. However, Apple may astound the market by setting a lower price. Considering Apple's track record of focusing on design, creativity, collaboration, and fitness, the device's "killer apps"
are expected to major on these areas, says Bank of America's Wasmi Mohan.
Price Target Adjustments and Market Outlook
Despite his "Neutral" rating on Apple, Mohan elevated his price target from $176 to $190 on Monday, implying an additional 5% gain from Friday's close. According to him, "Apple is best positioned to dominate the mixed reality [market]."
Implications for Apple's Services Division
The anticipated dominance in the AR/VR market could amplify the growth of Apple's lucrative Services division, encompassing App Store sales and subscriptions to services like Apple Music and Apple TV+.
Potential Service Growth
"Considering the pricing range of Meta's apps for the Quest headset, which spans from free to several dollars (some popular apps reaching $40), Apple's success in building a robust ecosystem with its headset could boost the growth rates of its Services," Mohan added.
Potential 'Killer Apps'
The speculated device's potential "killer apps" could range from a virtual fitting room for shoppers, a virtual meeting room for remote workers, or an AI-driven personal fitness coach.
Risk-Reward Evaluation
Despite the possible gains from the successful debut of Apple's anticipated AR/VR headset, Mohan maintains a "Neutral" rating on Apple. He believes that the prospects of new product launches and robust iPhone sales are balanced against the likelihood of declining consumer spending in the latter half of the year.
The information on mexem.com is for general informational purposes only. It should not be regarded as investment advice. Investing in stocks involves risk. A stock's past performance is not a reliable indicator of its future performance. Always consult a financial advisor or trusted sources before making any investment decisions.
