It was the brilliant and obsessive Steve Jobs – a tech visionary almost without peer – that built Apple into the technology giant it is today.
Innovation was at the heart of Jobs’ Apple. Across his career he would spin out hit after hit, from the Macintosh home computer, the iPod, the iPad, and most famously – the iPhone.
Tim Cook would then take the reins at the top of Apple and transform it into one of the largest and most profitable companies in the world. Cook’s Apple would become a company marked by incredible cash flows and small iterations – not the zero to one quantum leaps that Jobs inspired.
Cook Unveils ‘New Era of Computing’
Then on 5 June 2023 Apple would unveil its first major product innovation in close to a decade: An AR / VR headset called the Apple Vision Pro that CEO Tim Cook said ‘marks the beginning of a new era for computing’ for the world.
Source: Apple Official Youtube
Built on the visionOS, the AR / VR headset promises to transform the way individuals interact and experience applications, entertainment, and even social connection.
As Cook elaborated, the Vision Pro is ‘Built upon decades of Apple innovation, [and is] years ahead and unlike anything created before — with a revolutionary new input system and thousands of groundbreaking innovations.’
The Vision Pro is set to retail for US$3,499 and will be available to the public in early 2024.
Apple Share Price Outlook
The general response to the Vision Pro from individuals, the media, and internet commentators was mixed, with some criticising the pricing while others derided the design of the headset.
The reaction from investors has also been subdued since the headset was announced, with the Apple (NYSE:AAPL) share price trading flat between June 5 to 9, last at US$180.57 per share, though still up 44% YTD.
Source: Google Finance
Despite that, sell side analysts from key investment banks raised their price targets on Apple following the Vision Pro reveal:
- Credit Suisse boosted their price target to US$200 from US$188
- Morgan Stanley analysts raised their price target to US$190 from US$185
- Jefferies Financial Group bumped up their price target on Apple to US$210 from US$195
- Bank of America increased their price target to US$190 from US$176
More broadly, Apple currently has a Buy rating on average from analysts and an average estimated price target of US$186.27 per share, implying potential upside of around 3.1% from where the stock traded at on 9 June.
Analysts have historically, and continue to, like Apple.
What the Vision Pro Means for Apple’s Business
It’s impossible to separate Apple from the iPhone. Not only is it arguably one of the most important pieces of technology ever invented, but it remains the most important piece of the Apple empire.
In fiscal 2022, Apple sold around 225 million iPhones, generating a staggering US$205.4 billion in revenue in the process, equal to 52% of the company’s total revenue for the year.
To be sure, Apple is acutely aware of just how reliant it is on the iPhone, with efforts in recent years being made to diversify its revenue streams.
Apple’s Wearables, Home, and Accessories segment – which includes the Apple Watch, the company’s last innovative leap – contributed US$41.2 billion to the company’s top line in 2022.
The high margin Services segment – which derives its revenue from core Apple services like iTunes, Apple Music, Apple Pay and purchases made within the App Store – generated total 2022 revenue of US$78.1 billion – or 19% of total revenue.
Despite the impressive performances from the likes of Services or Wearables, without Jobs, Apple has been unable to ‘build a new iPhone’.
That’s not to say that aggressive iteration and shareholder friendly manoeuvres like share buy backs haven’t gotten them far – Apple is after all the most valuable public company in America, boasting a market capitalisation of US$2.840 trillion.
What Analysts are Saying About the Vision Pro
But what comes next for Apple? Can the Vision Pro unlock the next wave of growth for Apple? Here’s what analysts and technologists are saying:
Urho Konttori – CTO, Varjo
“We hope today is the turning point for consumers when it starts being part of their everyday lives too, with promising applications for entertainment, personal productivity, and communication.”
Kim Forrest – CIO, Bokeh Capital Partners
“You buy [Apple] because it mints cash, the gravitational pull of it in the index makes you need to own it to keep up with the market,’ with Forrest adding that ‘they reliably, every ten years or so, come out with products we didn’t know we needed.”
James Cordwell – Atlantic Equities
“If the device were eventually to drive a platform shift from mobile to AR, Apple has positioned itself to extend its leadership from the smartphone era to that new epoch.”
What do you think, will the Vision Pro unlock the next wave of growth for Apple, or will it ultimately disappoint?
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