Apple (NASDAQ:AAPL) stock may continue to be a tug of war between the bulls and the bears in the near term. While you could build a pretty strong bullish or bearish case for the $3 trillion (or more) tech titan, I’d argue that fortune favors the bulls as the Vision Pro launch looms. Undoubtedly, the Apple Vision Pro officially hits the market on February 2nd, and the reviews across the web are sure to be hot topics as many critics look to give their opinion on Apple’s first new product class in years.
The Vision Pro is a product that has a lot of potential, but I believe that its potential is being thrown away by the bears, who may be missing the trees for the forest.
Undoubtedly, the Vision Pro represents a giant leap in the field of spatial computing (or mixed reality, if you prefer). And while it won’t raise revenue too much (it represents a drop in the bucket as far as 2024 is concerned), I think those looking at the next three to five years will be impressed by what the Vision has. Because ultimately evolves to become.
With this in mind, I can’t help but remain bullish on AAPL stock ahead of the Vision Pro’s launch day.
Apple is Playing the Long Game with the Vision Pro
You see, Apple plays the long-term game, and when it launches a new product, it looks to build profits, not just in the short term but over many years. The Apple App Store wasn’t filled with must-have apps overnight. It was years before the many necessary apps we know and love came into being.
The same can be said for Apple’s Vision Pro App Store. The developers need time, but they will start to fill it with interesting space computing programs that can draw more crowds to pick up the latest iteration of Vision Pro.
For now, I’d look for the Vision Pro’s launch to be similar to that of the first Apple Watch, which was released just a decade ago. At first, many people scoffed at the idea of a smart watch, due to its rather limited features.
These days, you see Apple Watches on a wide range of different people, including those who aren’t exactly fitness fans. From the life-saving capabilities of the smart watch to its use as a status symbol – think the Apple Watch Ultra, which is an interesting purchase, even for those who do not participate in “extreme” sports, deep diving or hard hiking – in the office, it is clear , that the Apple Watch took a few years to warm up to consumers.
The same happens with the Vision Pro. It will take time before it hurts the overall product sales mix. However, it is a mistake to overlook the technology just because a bearish analyst does not view it as material in the near term.
The Vision Pro Won’t Increase Revenue Anytime Soon, But It Doesn’t Need To.
Of course, the bearish analysts are right. The Vision Pro won’t magically propel revenue growth higher for the next quarter or even the quarter after that. If you are a long-term investor focused on the next 10 years, however, I would argue that Vision Pro is a big deal and should not be ignored at the expense of products that are more relevant to the results in the present.
Further, a Vision Pro breakout alone may be able to push the stock higher from here if the early reviews are favorable and early demand remains hot. So far, pre-orders have been hot, with some experts believing the company sold as many as 180,000 during the pre-order weekend.
So, if you look at the past, you’ll probably see that iPhone sales growth isn’t where it needs to be to justify the stock’s current 31.68 times trailing price-to-earnings (P/E) multiple. Multiples like this require double digit growth, maybe even high double digit growth.
Will Apple be able to command that only with iPhone, Mac and services? Maybe, assuming the economy picks up in 2024. But there’s no doubt that Apple could use a new product to do more of the heavy lifting for years to come.
As the Vision Pro gets smarter and richer with experiences (wait for that Vision Pro App Store to fill up, folks), lighter, more comfortable and more affordable, you can bet more Apple users will want to make the big purchase .
Is AAPL Stock a Buy, According to Analysts?
On TipRanks, AAPL stock comes in as a Moderate Buy. Out of 32 analyst ratings, there are 23 Buys, eight Holds, and one Sell recommendation. AAPL’s average share price is $203.52, implying an upside potential of 4.8%. Analyst price targets range from a low of $150.00 per share to a high of $250.00 per share.
The Takeaway: Don’t Discount the Potential of the Vision Pro
Whether the average person starts seeing space computers publicly two years from now or more than five years from now, I believe AAPL stock could have a lot to gain in the back half of this year as we finally get our hands on Vision Pro . It’s a product that could give us a glimpse of the future — one that could be profoundly successful for Apple.
Disclosure
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.