Apple (NASDAQ:AAPL) stock may continue to be a tug of war between the bulls and the bears over the near term. Though you could build a pretty strong bullish or bearish case for the $3 trillion (or so) tech titan, I’d argue that fortune favors the bulls as the Vision Pro launch looms. Undoubtedly, the Apple Vision Pro officially goes on the market on February 2, and the reviews across the web are sure to be hot topics as many critics look to give their take on Apple’s first new product class in years.
The Vision Pro is a product that holds quite a bit of potential, but I believe its potential is being dismissed by the bears who may be missing the trees for the woods.
Undoubtedly, the Vision Pro represents a giant leap in the field of spatial computing (or mixed reality, if you prefer). And though it won’t nudge earnings higher by all too much (it represents a drop in the bucket as far as 2024 is concerned), I do think those looking out to the next three to five years stand to be impressed by what the Vision Pro ultimately evolves to become.
Given this, I can’t help but remain bullish on AAPL stock ahead of the Vision Pro’s launch day.
Apple’s Playing the Long Game with the Vision Pro
You see, Apple plays the long-term game, and when it launches a new product, it’s looking at building profits, not just in the short term but over many years. The Apple App Store wasn’t populated with must-have apps overnight. It took years before the many must-have apps we know and love came to be.
The same thing can be said for Apple’s Vision Pro App Store. The developers need time, but they will begin to populate it with intriguing spatial computing apps that may draw in more crowds to pick up the latest iteration of Vision Pro.
For now, I’d look for the Vision Pro launch to be similar to that of the first Apple Watch, which was released just shy of a decade ago. Initially, many people scoffed at the idea of a smartwatch, given its fairly limited features.
Nowadays, you see Apple Watches on a broad range of different people, including those who aren’t exactly fitness buffs. From the smartwatch’s life-saving capabilities to its use as a status symbol — think the Apple Watch Ultra, which is an intriguing buy, even for those who don’t partake in “extreme” sports, deep-sea diving, or hardcore hiking — in the office, it’s clear that the Apple Watch needed a few years to warm up with consumers.
The same goes with the Vision Pro. It’s going to take time before it makes a dent in the overall product sales mix. However, it’s a mistake to overlook the technology just because a bearish analyst doesn’t view it as material over the near term.
The Vision Pro Won’t Boost Earnings Soon, but It Doesn’t Need to.
Of course, the bearish analysts are right. The Vision Pro won’t magically propel earnings growth higher for the next quarter or even the quarter after that. If you’re a long-term investor focused on the next 10 years, however, I’d argue that Vision Pro is a big deal and should not be ignored at the cost of products that are more meaningful to the results in the present.
Further, Vision Pro hype alone may be able to nudge the stock higher from here if the early reviews are favorable and early demand stays hot. Thus far, pre-orders have been hot, with some pundits believing the company sold as many as 180,000 during the pre-order weekend.
So, if you look to the past, you’ll probably see that iPhone sales growth is not where it needs to be to justify the stock’s current 31.68 times trailing price-to-earnings (P/E) multiple. A multiple like this calls for double-digit growth, perhaps even high double-digit growth.
Will Apple be able to command that through iPhone, Mac, and services alone? Possibly, assuming the economy picks up traction again in 2024. But there’s no question Apple could use a new product to do more of the heavy lifting over the coming years.
As the Vision Pro gets smarter and richer with experiences (wait for that Vision Pro App Store to populate, folks), lighter, more comfortable, and more affordable, you can bet that more Apple users are going to 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. The average AAPL stock price target is $203.52, implying 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 Vision Pro’s Potential
Whether the average person starts dawning spatial computers in public two years from now or more than five years from now, I believe AAPL stock could have a lot to gain into the back half of this year as we finally get our hands on a Vision Pro. It’s a product that could give us a glimpse of the future — one that could be profoundly prosperous for Apple.