The Upgraded Recommendation
We have upgraded our assessment of Apple Inc. (NASDAQ:AAPL) stock from a Sell to a Buy after witnessing a remarkable turnaround following the lackluster performance in June 2023. The ramifications of Apple’s triumphant resurgence resonate positively, propelling our confidence in the company’s forthcoming sales and profitability.
Anticipating the highlights of 2024, the imminent release of the new iPhone 15 and the launch of their Vision Pro augmented reality glasses are pivotal forces poised to fuel Apple’s growth trajectory.
Fueling Growth in 2024
Our conviction in Apple’s potential surpassing the tepid projections rests on several factors. Firstly, the deployment of AI-powered innovations across Apple’s product spectrum is set to be a growth catalyst, enhancing the appeal of their offerings. Secondly, reprising its position as the leading smartphone vendor and the robust growth of its services business are instrumental in underpinning sustained revenue expansion.
Furthermore, the introduction of novel products and services is anticipated to yield operating efficiencies that accelerate earnings per share (EPS) growth, outpacing revenue increments. Lastly, Apple’s substantial share repurchase program is poised to deliver a favorable lift to EPS through prudent financial engineering.
Considering the tailwinds from AI products, service momentum, operational leverage, and capital management, it is evident that Apple’s growth potential transcends the conservative estimates currently prevailing in the analyst community. The narrative is more potent than convention suggests, and we anticipate unanticipated positive developments to unfold in 2024.
Furthermore, the forthcoming launch of Apple’s Vision Pro augmented reality headset on January 19th and its subsequent availability for shipment starting February 2nd piques our interest. Scrutinizing Vision Pro’s prospective impact can arm investors with valuable foresight to navigate its impending market debut. Despite being discounted by the market, we opine that the Vision Pro holds the potential to exceed prevailing expectations once it hits the market.
Innovatively designed to mitigate discomfort and dizziness concerns, the Vision Pro’s discrete battery configuration enables extended usage, expanding its utility beyond gaming into productivity applications. Additionally, Apple’s competitive standing vis-à-vis Meta Platforms, Inc. (META) is bolstered by VisionOS, allowing seamless access to an array of existing 2D iOS apps until their AR equivalents materialize.
Apple’s Recent Dominance in the Market
Amid the revelatory news of Apple usurping Samsung Electronics Co., Ltd. (OTCPK:SSNLF) as the foremost smartphone brand in 2023, as per IDC, a wave of exhilaration engulfed the market. It comes as no surprise given the palpable momentum behind the launch of the iPhone 15, substantiated by a surge in Google search interest exceeding its predecessor, the iPhone 14.
Eclipsing its contemporaries in smartphone shipments fortifies Apple’s negotiating leverage with suppliers, further consolidating its preeminent position in the market.
Apple’s Strategy and Evolving Culture
The tenure of Tim Cook at the helm heralded a paradigm shift in Apple’s corporate ethos, marking a departure from the innovative fervor hallmarking the Steve Jobs era. While subjected to ridicule during each iPhone launch, present-day Apple has metamorphosed into a profit-centric entity, iteratively refining existing technology. Consequently, securing premier components and manufacturing capacity has emerged as a linchpin of Apple’s operational strategy.
The Dawn of AI and Consumer Electronics in 2024
The consumer electronics landscape in 2024 is poised for a transformative overhaul, spearheaded by AI-infused phones and computers. Despite Alphabet Inc. (GOOG, GOOGL) and Samsung’s preemptive foray into AI gadgets, Apple’s potential to make a resounding entry remains undiminished. Leveraging its industry affiliations to procure state-of-the-art chips, such as the cutting-edge 3nm processors from Taiwan Semiconductor Manufacturing Company Limited (TSM) earmarked for the iPhone 15, catalyzes Apple’s competitive edge.
The impending surge in AI appliances portends a new cycle of consumer tech, accentuating Apple’s growth trajectory in 2024. Concurrently, amidst speculative murmurs surrounding its rumored augmented reality headset, Apple’s prowess in refining emerging technologies in an intuitive and aesthetically pleasing manner augurs well. Augmented reality, potentially metamorphosing into a mainstream computing platform, constitutes a pivotal inflection point to monitor. Importantly, we prognosticate that Vision Pro will not cannibalize iPhone or Mac sales but rather fortify incremental revenue, strengthening Apple’s ecosystem.
Comparative Analysis against Meta’s Quest 3
The prevailing market consensus appears remiss in fully factoring in the potential
