Apple (NASDAQ: AAPL) has a massive valuation of almost $3 trillion. It’s one of the most valuable companies in the world, with some competition behind it Microsoft in terms of market capitalization. But many analysts and investors remain optimistic that the company can become even more valuable in the future.
One of them is CNBC’s Jim Cramer. What may surprise you is the reason for his optimism. It’s not because of the arrival of a new iPhone or the company’s plans to launch a chatbot, or even the strength of its services business. This concerns an area of Apple’s business that is still unproven.
Could Apple’s Vision Pro be an underrated growth opportunity?
Apple’s Vision Pro virtual reality headsets became available to US consumers earlier this year. But with a price tag begins at $3,499, it’s steep even for Apple customers who are used to paying top dollar for their devices.
However, Cramer believes this is a huge opportunity for the company, one that could make Apple a huge amount of money in the coming years.
The problem is that he thinks the headset should be aimed at businesses. Using digital twins, the device could help industrial environments reduce waste and test changes before they are actually deployed in factories. It could boost sales by allowing business customers to view large items (e.g. cars) before placing an order for them, thus avoiding site visits and expensive travel.
With so much potential for the headsets, Cramer thinks they could be considered inexpensive for business customers.
However, the Vision Pro remains unproven
The demand for headsets is not high, at least not yet. Apple has reportedly drastically lowered its forecast for the Vision Pro headsets, according to an analyst covering the company. From an estimate of 700,000 to 800,000 units sold this year, Apple now expects a much lower range, between 400,000 and 450,000 units.
By comparison: rivalrous Metaplatforms has sold tens of millions of its Quest headsets, but has had to lower prices along the way. Today, consumers can purchase a Quest headset for just a few hundred dollars. Even for companies, it can be difficult to pay a significant premium for Vision Pro headsets, even if they think they are superior.
And while there is a potential market for corporate buyers, I think Cramer is overstating it. Businesses don’t need expensive headsets to evaluate major purchases or run “what if” scenarios.
Additionally, using the headsets would change business processes, requiring user training, and additional software might be needed to integrate them with a company’s existing systems. It probably wouldn’t be as simple as just putting on a headset and continuing with regular workflows. There are additional costs and limited resources to consider.
Apple is a good stock to buy, but not because of the Vision Pro
Apple’s Vision Pro headsets certainly have the potential to be an exciting new product for the tech company, but even if they are successful, the headsets may not make a big difference in the company’s revenue.
Apple has generated a whopping $382 billion in revenue over the past twelve months. If the Vision Pro made up even 1% of sales, the company would have to sell more than 1 million per year at its current price tag. That could be a tall order, especially when Meta’s devices could offer a much cheaper alternative to potential buyers.
There are many reasons to love Apple. It has a loyal customer following, its services sector continues to grow and generate record revenue, and the company is flush with cash, recently announcing an incredible $110 billion stock buyback plan.
These are all reasons to remain optimistic about the company. The Vision Pro could be a good pick for Apple, but it’s far too early to expect it to be a major growth driver for the company in the long term, and investors should be careful not to set their expectations too high.
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Is Jim Cramer right about this Apple catalyst? was originally published by The Motley Fool
