But is Apple positioned for an encore? Can the company match up to these high expectations? We remain bullish for a number of reasons.
Apple has managed to reignite iPhone sales growth. Its 5G offering is still in the early stages and could ramp up over the next several weeks. Also, the company has launched some new and exciting hardware, like its AirPods and Beats headphones. The latest addition is the premium AirPods Pro Max headphones, launched in December. Apple has also been successful in developing new subscription-fee based services, including Apple Music and Apple TV+, and other revenue streams like Apple Pay and Apple Arcade. This is the segment that earns the highest margins. Although most people think of Apple as a hardware company, the Services business has been identified as its growth engine going ahead. That’s the vertical investors should really keep an eye on.
There have been speculations around Apple’s plans to enter new market segments. The company certainly has the wherewithal to do so. A recent Bloomberg News article said that Apple may launch its first virtual reality headset (like Oculus Quest 2) as early as 2022. We won’t be surprised if Apple’s VR headset has the most powerful processor that the world has seen so far.
Recently Reuters also quoted unnamed sources as saying that Apple has plans of manufacturing autonomous cars and targets to launch the first model in 2024. Since 2014, the company has been spending R&D dollars to develop an autonomous driving system that could be integrated into a car. But now Apple has ambitions of going beyond and launching its own self-driving car.
The one thing that keeps us a tad wary is the lack of guidance from management. Before the pandemic, Apple always provided a precise revenue forecast. Management not only refrained from providing any forecast, CEO Tim Cook and CFO Luca Maestri maintained a cautious tone during the latest earnings call. Still, Apple has an enormous kitty to spur growth and is well positioned to propel sales as the economy recovers.