Bank of America reaffirms its Buy rating on Apple Inc. AAPL, noting robust future demand as the tech giant refreshes its iPhone lineup and unveils the highly anticipated Vision Pro, a virtual reality headset.
Despite unwavering loyalty towards the iPhone, attributed to its exclusive iOS platform, consumers appear hesitant towards adopting the Vision Pro, primarily due to its steep starting price of $3,499.
A Bank of America survey discovered that 10% of U.S. respondents expressed interest in purchasing the Vision Pro but expressed reservations about its pricing.
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Record Numbers for Apple’s User Base
Last month, Apple reported stellar quarterly earnings, highlighting a record installed base of active devices exceeding 2.2 billion, marking a historic high across all products and regions.
Tim Cook, Apple’s CEO, mentioned, “As consumers prepare to delve into the marvel of Apple Vision Pro, we remain steadfast in our pursuit of groundbreaking innovations.”
Bank of America conducted further analysis to identify desired price points among respondents uninterested in purchasing the Vision Pro at its current cost. The survey revealed a U.S. average of $2,090.
With the introduction of new apps like Apple Sports and Apple Arcade, Apple’s services division witnessed its highest-ever revenue figures in the recent quarterly earnings release.
BofA analyst Wamsi Mohan stated, “U.S. users exhibited an increase in average spending on Apple services to $31.57 per month, up from $28.05 in the previous period.”
Anticipating a surge in upgrades, Bank of America predicts a robust refresh cycle over the next couple of years, especially as generative artificial intelligence (GenAI) features become prominent on smartphones, as per Mohan.
Citing internal research, Mohan highlighted the enduring loyalty of Apple customers, revealing that 57% of current iPhone users intend to upgrade to the latest model, surpassing figures for competitors such as Samsung, Huawei, and Xiaomi.
This aligns with findings from research firm CIRP in 2021, indicating Apple’s consistent customer loyalty rate exceeding 90% over the last three years, based on the proportion of iPhone users upgrading from prior models.
Apple’s shares were trading 0.7% higher at $181.29 during midday on Wednesday. Year-to-date, the stock has dipped by approximately 6% since the beginning of the year.
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