Morgan Stanley hikes AAPL target to $190, because 'Reality Pro' will be a $20 billion plat...

AppleInsider

Investment firm Morgan Stanley has raised its Apple price target to $190 on the expectation it will launch a category-defining AR and VR headset -- and in doing so, dramatically expand the market.


An Apple Store logo

Ahead of Apple's WWDC announcements on June 5, 2023, Morgan Stanley says it is now including estimates of Apple AR headsets in its overall prediction model for the company. As a consequence, its expectations for the headset means that it has increased its target price from $185 to $190.

"Apple is set to unveil its first new hardware category since 2016 -- the much-anticipated 'Reality Pro' AR/VR headset -- at WWDC 2023," wrote analysts in a note to investors seen by AppleInsider. "Our supply chain checks tell us Reality Pro general availability will likely come in the Dec '23 quarter, and that builds will ramp from 300-500k in CY23, to 3-4M by CY25."

"However, we assume a more conservative shipment ramp," the note continues, "with Apple reaching 3.4M shipments by 2026 (i.e. 1 year later than the current build forecast), implying a revenue ramp from $2.6B in FY24 to $8B in FY26, in-between the post-launch ramp of Apple Watch and AirPods."

Morgan Stanley analysts expect Apple's headset to have a significant impact on growing the market for such devices. Just as it did with the iPhone, Apple is expected to increase what's called the Total Addressable Market (TAM), or the number of buyers considering headsets.


Morgan Stanley predicts that Apple's headset will do better than the Apple Watch

"Longer-term, we anticipate the combination of technological improvements, new use cases, and lower price points can drive the AR/VR headset TAM to $100B by 2030, and over $500B by 2037," say the analysts, "implying AR/VR could become the next major ($20B+) standalone compute platform for Apple."

This growth prediction is based in part on how "Apple has historically driven TAM expansion in new markets it enters." However, it's also based on the analysts' "checks over the last two years" which "show sharp increases in AR/VR venture capital activity, R&D quality and quantity, and corporate and consumer interest in the space."


Buyers' preference for AR firms (source: 2021 Harris Group survey via Morgan Stanley)

Morgan Stanley also points out to investors that in 2021, three times as many people surveyed said they would prefer to buy an AR/VR device from Apple than from their second-place choice, Google.

That same survey put Facebook/Meta sixth, also behind Samsung, Amazon, and Microsoft. Ahead of Apple's announcement, Meta has recently pre-announced its forthcoming Meta Quest 3, though it's some four months before more details will be revealed.

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badmonk

Agree JP234, I suspect Mark Z and the FB/Meta crowd are having some sleepless nights now.

danox

Apple “Building Better Ecosystems?” don’t sit on the fence start that portfolio and buy shares, who knows by the end of the year you just might be able to buy Apple Glasses, and that Studio/Mac Pro on the profits.

danox

badmonk said:

Agree JP234, I suspect Mark Z and the FB/Meta crowd are having some sleepless nights now.

I believe they pre-announced their version, kinda like Steve Ballmer showing off all those horrible PC tablets back in the day, before Apple blew up the market.

9secondkox2

Apple should be $190 already. 

 It Morgan Stanley predicting an unseen product - especially after Meta’s competing idea is a “bag of hurt”to quote jobs, is incredibly irresponsible. 

But if anyone can do it, it’s apple. I just feel bad for the team working on this that their secret has been anything but. 

chutzpah

9secondkox2 said:

Apple should be $190 already. 

Please provide your financial analysis of this.

seantheman

badmonk said:

Agree JP234, I suspect Mark Z and the FB/Meta crowd are having some sleepless nights now.

The thing is Apple came out with a headset that has absolutely NO hand controllers.  Even though Apple mentions that their headset does both AR and VR.  Without hand controllers, then VR gaming will be very limiting on Apple's VisionOS platform, especially when when you think about any fast paced VR games, like a Call of Duty type VR game.  There is two major things that those hand controllers bring to a VR platform, and that is haptic feedback, and multiple rapid input events.  Which I cannot see eye, hand, and gesture controls perform the multiple, rapid input events simultaneously to a VR game or app.  If you played Call of Duty, then you would know that you can run, walk, climb, crawl, and at the same time, shoot a gun, throw a grenade, reload ammo, and so much more.  For that reason alone, I can't see Apple's Vision Pro headset becoming a competing VR gaming platform.