Apple (AAPL 0.50%) announced its long-rumored mixed-reality headset at the company's Worldwide Developers Conference on June 5, and Wall Street's reaction to the device hasn't quite been enthusiastic.

Shares of Apple haven't moved much since the formal announcement of the Vision Pro headset. That's not surprising given that Apple has priced the device at a rich $3,499, which makes it quite expensive when compared to what the competition offers. Also, the device will hit the market only in early 2024, so it is difficult to gauge what kind of impact it is going to have on Apple's sales.

Given that the Vision Pro is a first-generation device that's going to help Apple test the waters in the nascent mixed reality market, it is not surprising to see investors' lukewarm reception to the device. Moreover, Apple still has work to do to ensure that users pay such a massive premium for its headset -- such as developing a compelling app ecosystem.

But while the Apple Vision Pro may not have elicited a solid response from investors, the next iPhone could give them a big reason to cheer. Let's see why that may be the case.

Apple's next-generation iPhone could drive a massive upgrade cycle

Wedbush Securities analyst Dan Ives has raised his price target on Apple stock from $205 to $220, claiming that the company is on track to win big from its next iPhone. According to Ives, there are around 250 million iPhones in an upgrade window as they are more than four years old. As a result, the next iteration of the iPhone, which should ideally be launched in the third quarter of 2023, could turn out to be a big growth driver for Apple.

Consumer Intelligence Research Partners pointed out last month that the average selling price of an iPhone jumped to a record $988 in the first quarter of 2023, an increase of 12% over the prior year. Apple achieved this remarkable feat at a time when the global smartphone market was in a state of decline.

Market research firm IDC estimates that global smartphone shipments dropped nearly 15% year over year in the first quarter of 2023. Apple's shipments were down just 2.3% as compared to the prior-year quarter, suggesting that the iPhone commanded robust loyalty even at a time when many consumers were unwilling to spend money on smartphones.

It is also worth noting that iPhone average selling price has increased for four consecutive quarters now. Supply chain rumors suggest that Apple could bump up the price of the Pro version of its upcoming smartphone. Given that the higher-priced iPhone 14 Pro and Pro Max versions have been witnessing stronger demand than the iPhone 14 and the iPhone 14 Plus, a price increase by Apple could help it further increase the average price.

The tech giant could deliver stronger-than-expected growth

Assuming Apple manages to increase its iPhone average sales price to $1,000 when it launches the next iteration of its flagship product, the company's potential revenue opportunity from the device could be a massive $250 billion (based on the 250 million iPhones that are in an upgrade window as per Wedbush).

Apple generated $200 billion in iPhone revenue over the past four quarters, which means that a combination of strong pricing power and a big installed base of users in an upgrade window could drive significant revenue growth for the company.

The iPhone is Apple's biggest source of revenue, producing 55% of its top line in the first six months of the current fiscal year. So, a potential increase of 25% in iPhone revenue in the fiscal year following the launch of the company's next smartphone could help Apple deliver stronger-than-expected growth.

Analysts expect Apple to deliver $384 billion in revenue in the current fiscal year (which will end in September). Of that, the iPhone could deliver $211 billion based on the 55% revenue mix it commands, with the remaining $173 billion coming from other businesses. If Apple's iPhone revenue in the next fiscal year jumps to $250 billion based on the discussion above, its total revenue in fiscal 2024 could jump to $423 billion if its revenue from the other business streams remains constant.

That figure would be higher than the $410 billion revenue analysts are anticipating from Apple next fiscal year. However, considering the potential growth of Apple's services business and new products such as the Vision Pro, there is a possibility Apple's top line might exceed the $423 billion figure.

As such, it won't be surprising to see this tech stock head higher and deliver more upside following impressive gains of 41% so far in 2023, suggesting that investors might want to consider buying Apple before it soars further.