Apple: the Growth 📈 story goes on (by @seekingalpha)

  • Apple had a 33.5% stock growth during the previous year, reaching a $3 trillion valuation mark, making it the highest valued company globally.
  • The company reported a 29% QoQ revenue growth, but the number does not include iPhone 13 sales yet. These sales will be reflected in the current quarter results.
  • Apple services have almost doubled the gross margin compared to the rest of the Apple products, and the segment is vigorously increasing.
  • Silicon Valley giants, including Apple, are gearing up to materialize the untapped potential offered by the Metaverse through its AR/VR developments.
  • I am bullish on the stock as it boasts a 19% upside in the coming months while promising heavy future returns through rigorous growth.

Origin: Seeking Alpha – Apple: The Growth Story Goes On

As Apple has recently hit a $3 trillion valuation mark, Investors look forward to “the next big thing” that will stretch the valuation even further. As such, Augmented Reality has opened new doors for the tech industry and answers that question in the form of Metaverse. Apple is on its way to the Metaverse space as it plans to step into the eyewear market through the AR Glasses soon.

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A significant point to be noted is that the iPhone 13 launched at almost the end of the company’s fourth quarter. Therefore, the iPhone revenue figure of $38.87 billion in Q4 does not include its sales.

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Apple’s services category includes revenue generated from the App Store, Apple Music, Apple Arcade, Apple Pay, Apple Card, Apple TV+, Apple News+, Apple Fitness+, AppleCare+, iCloud, iTunes Store, licensing, etc. Apple has over 745 million paid subscriptions, up 160 million YoY, and five times in five years. Moreover, as shown in the chart below, the service revenue has been reaching a record-breaking level in each of the previous six quarters, signaling a promising growth potential in the service segment.

With a revenue of over $68 billion, the company is well on its way to Evercore ISI analyst projections of $100 billion Apple services revenue by 2024, accounting for 30% of total revenue and 45% of gross profit. As a result, this implies a CAGR of 21% for the services segment alone.

The Metaverse is not something to be launched but rather something evolving over time, and we can expect Apple to enter this space once it has perfected the technology. The company’s first steps into this world seem to be materializing within 2022. It is already developing its mixed reality (MR) headset and has further collaborated with Sony to design and develop its AR glasses.

Apple is one of the best AR platform providers globally, with its ARKit and RealityKit frameworks having direct access to a customer base of hundreds of millions. Following Apple’s footprints, we can see it heading towards this untapped AR and VR market through years of strategic investments and acquisition in the AR/VR market:

No.

Company

Acquisition Year

Company Specialty

1

Spaces

2020

Conferencing Software for VR Headsets

2

NextVR

2020

Event Hosting VR tech

3

Camerai

2019

AR and Computer Vision

4

IKinema

2019

Motion Capture/Animate Video Footage

5

Akonia Holographics

2018

Lenses for AR Glasses

6

Vrvana

2017

AR/VR Headsets

7

SensoMotoric

2017

Eye Tracking

8

RealFace

2017

Facial Recognition

9

Emotient

2016

AI for facial expressions analysis

10

Flyby Media

2016

AR tech to identify and tag real-world objects

11

Faceshift

2015

Face Capture

12

Metaio

2015

AR Software

U.S. Patent and Trademark Office granted Apple a patent relating to the head-mounted display (HMD) that combines 3D virtual views of the user’s environment and augments this with virtual objects leading to the MR. The HMD MR device can take any form of a headset, helmet, goggles, or glasses and, through its sensors, can capture the user’s facial expressions, gestures, and eye movement. 

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💰💰conclusion

In all its years of operation, Apple has been a veteran of superior investor returns for over a decade, and despite reaching a record valuation of over $3 trillion, it still has a lot to offer. Impressive profitability metrics along with solid growth and heavy R&D investment are hallmarks of successful, forward-looking companies.

After shedding off the downturn caused by the pandemic and gaining stability, Apple is gearing up again to disrupt the industry by expanding into the AR/VR/MR and Metaverse and further expanding the Apple Services revenue streams. The company’s strong fundamentals perfectly complement its long-term objectives, making it well deserved for the valuation titles that it carries.