It’s hard to remember the last time Apple (NASDAQ:AAPL) stock had this many intriguing catalysts on the horizon. With the ongoing services push and the VR headset likely a few quarters away, the company seems well-positioned to effectively leverage innovation to plow through a coming recession.
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Undoubtedly, all the hype surrounding the Metaverse has faded significantly over the past year (it’s all about generative AI and ChatGPT these days), with the value of metaverse real estate taking a massive hit to the chin.
Though I’m not impressed with the current state of Meta Platforms’ (NASDAQ:META) metaverse, I believe it’s too soon to dismiss the potential of the Metaverse and the rise of virtual and augmented reality as some sort of bubble.
As Apple moves closer to unveiling its much-anticipated headset, low expectations could set the stage for something truly delightful. As such, I remain bullish, even as Apple stock continues its march to new highs.
Meta’s Metaverse Has Some Questioning VR’s Future
As Meta progresses with its “year of efficiency,” its ambitious metaverse efforts will probably take a backseat. Undoubtedly, Meta hasn’t been able to onboard users at the rate of other emerging technologies (like ChatGPT). Last year, former Oculus top boss Palmer Luckey slammed Meta’s metaverse as “not good” and “not fun.” Such comments are discouraging but not a sign that the Metaverse is going nowhere.
There are many reasons for the Metaverse’s relatively sluggish start. The high price of admission with premium headsets, the lack of a “killer” app, and a less-than-impressive look and feel are likely what’s holding back the Metaverse from having its iPhone or ChatGPT moment.
Over the coming years, it will be interesting to see if Apple’s take on the Metaverse will bring the Metaverse hype back to where it was in 2021. At this juncture, though, it seems like investors have tempered their expectations. That’s a good thing for Apple as it puts the finishing touches on its next big thing.
These days, the Metaverse is easy to dismiss as a nascent technology that may not be able to “take off” anytime in the near future. It’s always difficult to gauge when such an emerging technology has its big moment.
Currently, I believe it’s hardware that’s holding back truly next-generation VR and AR experiences. As many VR users may know, it’s too easy to get nauseated by a VR experience, especially on cheaper, lower-end devices with lower frame rates on lower-resolution panels.
Meta has a high-end Oculus Quest Pro headset for $1,499.99, fully equipped with the latest and greatest hardware. Still, reviews have been mixed, with some feeling that the device has launched too early in the game. Just how early remains the billion-dollar question!
For Meta, being too early to the Metaverse race could carry its fair share of risks as Apple and other potential rivals look to learn from Meta’s mistakes and triumphs. Indeed, being a first-mover isn’t always what it’s cracked up to be, at least in the world of nascent tech.
As higher-end headsets get less bulky and more capable with every release, it’s hard to imagine the Metaverse slowly fading into the background anytime soon. Yes, the hype got out of hand in 2021, but with reset expectations, the Metaverse still seems like one of the trends (along with AI) to keep tabs on as an investor.
Apple’s Expertise Could Help VR and AR Take Center Stage Again
As Apple looks to make a splash in mixed reality with a headset, it must find the right balance between cost and performance. Fortunately, the firm has excelled at providing a good mix of options with its iPhone hardware. The “good, better, best” hardware tiers could translate well into new hardware categories.
Unlike most other firms, Apple’s lowest-end tier doesn’t compromise when it comes to the capabilities of the hardware. It may lack a cutting-edge feature exclusive to “Pro” models, with lower-quality materials used (let’s say aluminum over stainless steel). However, in terms of value, Apple still offers an exceptional experience for those on a budget.
Even a low-tier device needs to deliver a mind-blowing experience when it comes to mixed reality. Otherwise, some may dismiss the VR or AR as “not yet ready.”
If truly competent hardware to power incredible virtual experiences isn’t here yet, it’s probably very close. Apple’s Silicon chips can deliver truly ground-breaking performance without being a sink on power.
Apple’s M-series chips, rumored to be included in the coming headset, could help make the augmented or virtual experiences we dream about a reality. That said, there’s one caveat: such a premium headset will cost a considerable sum.
According to a report from The Information, such a high-end headset could cost as much as $3,000. That’s double the price of Meta’s Quest Pro.
Of course, it’d be nice to allow the average consumer to experience genuinely immersive virtual experiences at a low price point. However, in the early stages, it seems like only those with fat wallets will be able to get an early glimpse of truly next-generation mixed reality.
Is AAPL Stock a Buy, According to Analysts?
Turning to Wall Street, AAPL stock comes in as a Strong Buy. Out of 29 analyst ratings, there are 23 Buys, five Holds, and one Sell recommendation.
The average Apple stock price target is $171.16, implying upside potential of 3.6%. Analyst price targets range from a low of $107.00 per share to a high of $205.00 per share.
The Bottom Line on Apple Stock
In due time, high-caliber headset hardware will get cheaper. As it does, the floodgates will gradually open in the Metaverse market. Unlike ChatGPT’s adoption, which skyrocketed to the moon in what seemed like an instant, broader adoption of headsets could take many years. As Apple looks to unveil its headset, I’d look for the adoption rate to accelerate.
