Shares of Apple (AAPL) were relatively flat after hours, up about half a percentage point, following a solid Q3 result. With artificial intelligence (Apple Intelligence) and the next iPhone 16 on seemingly every analyst’s mind, some may be overlooking other innovations (think updates on Apple Vision Pro and new spatial content coming) that may start moving the needle faster than you’d expect. Despite barely budging higher after its latest quarterly beat, I’m staying bullish.
Don't Miss our Black Friday Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
For now, though, it’s all about Apple Intelligence as we witness the final few quarters before what could be an iPhone supercycle for the ages.
Apple Little-Changed after Stellar Third Quarter
The latest quarter didn’t really see too much in the way of surprises. The third quarter surpassed estimates, with revenue rising 5% year-over-year, while earnings per share came in at $1.40, comfortably ahead of the $1.34 expectation. Notably, iPhone sales came in at $39.2 billion, down ever so slightly from the $38.9 billion reported over the same period last year.
Even though Apple Intelligence is coming to the iPhone 15 Pro (today’s latest and greatest device), it still seems like most folks are holding off for the next one.
Whether it’s for the new AI capabilities in the next A-series chip or some new design elements, many folks are gearing up for a hint of what could be an Apple Intelligence-powered device refresh cycle. Or if you’re inclined to believe some of the market’s bigger bulls, like Wedbush’s Dan Ives, it could even be an AI iPhone supercycle, the likes of which we may not have seen in a very long time.
During the conference call that followed the big quarterly reveal, CEO Tim Cook sounded excited about Apple Intelligence despite recent news that it’ll be releasing a bit later than initially expected.
When it comes to such game-changing features, perhaps it’s best that Apple gives itself time to really polish things before launching. After all, there are lessons to be learned from Alphabet’s (GOOGL) Google when it was the subject of negative criticism following the imperfect launch of its large language model Gemini. Between embarrassing AI blunders and a few months of delay, I’d take the latter any day of the week.
With AAPL stock up just 0.7% post-earnings, it seems like investors and analysts didn’t get the hints or new info about Apple Intelligence they were hoping for during the conference call. However, there were some takeaways from the call that others may have overlooked.
Apple Vision Pro Comments Were Encouraging
Although Vision Pro sales are a drop in the bucket for total revenues and virtually meaningless for AAPL stock right now, I still think recent advancements and the path forward are worth keeping tabs on if you’re in shares of the Cupertino-based giant for the long haul.
It has been more than a year since Apple unveiled its mixed-reality device (or spatial computer) to the world. Since launch day, the enthusiasm surrounding the product and the long-term spatial computing roadmap has cooled considerably. While analysts and investors are sure to overlook Vision Pro and spatial computing-related commentary during the Q3 2024 conference call, interesting points were raised that could bolster the longer-term thesis.
Most notably, Tim Cook remarked on the international Vision Pro rollout, new upgrades in visionOS 2 (think more customization to workspaces and more immersive movie viewing), and a coming slate of Vision Pro exclusive content.
Content is king. Whether it’s about retaining and attracting subscribers to Apple TV+ or convincing people to buy a new type of device (like a spatial computer), there needs to be a deep (and high-quality) slate of content there to appeal to crowds.
Back in mid-June, Apple announced it was bringing around 150 3D films and series to Vision Pro in addition to an immersive concert featuring The Weeknd and immersive NBA content. Undoubtedly, the new content slate may just be enough to impress those demoing Vision Pro enough to buy one.
As Apple doubles down on spatial content, with potentially new Hollywood licensing deals on the horizon, the company has a chance to show us it’s as much a metaverse play as it is an AI one.
While Apple Intelligence and some chance of an iPhone supercycle may be partially baked into the stock after its latest 7% correction, I see the Vision Pro as a compelling wild card that could justify the 29.90 times forward price-to-earnings (P/E) multiple.
Is AAPL Stock a Buy, According to Analysts?
On TipRanks, AAPL stock comes in as a Moderate Buy. Out of 33 analyst ratings, there are 24 Buys, eight Holds, and one Sell recommendation. The average AAPL stock price target is $246.89, implying upside potential of 12.3%. Analyst price targets range from a low of $180.00 per share to a high of $300.00 per share.
The Bottom Line on Apple
Apple’s Q3 results were solid, but they didn’t really move the needle. With forces working against the entire tech sector, perhaps Apple stock is a great value buy, post-earnings.
The company’s coming iPhone 16 and Apple Intelligence launch may be on everybody’s radar right now. But the latest Vision Pro content pipeline, I believe, may not be. Either way, the stock looks quite intriguing right here as the tech correction moves into August.
