Apple (AAPL 0.87%) has a mammoth valuation near $3 trillion. It's one of the most valuable companies in the world, trailing only rival Microsoft in market cap. But many analysts and investors remain optimistic that the business can become even more valuable in the future.
One of them is CNBC's Jim Cramer. What might surprise you, however, is the reason for his optimism. It's not due to a new iPhone coming out or the company's plans to launch a chatbot, or even the strength of its services business. It involves an area of Apple's business that remains unproven.
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Could Apple's Vision Pro be an underrated growth opportunity?
Apple's Vision Pro virtual reality headsets became available for U.S. consumers earlier this year. But with a price tag that starts at $3,499, it's steep even for Apple customers who are used to paying top dollar for its devices.
Cramer, however, believes it's a huge opportunity for the business, one that could be an enormous moneymaker for Apple in the years ahead.
The problem is that he believes the headset should be targeted to businesses. Using digital twins, the device could help in industrial settings to reduce waste and test out changes before actually deploying them at factories. It could promote sales by allowing business customers to view large items (e.g., cars) before placing orders for them, avoiding on-site visits and costly travel.
With so much potential for the headsets, Cramer believes that they could be considered cheap for enterprise customers.
The Vision Pro remains unproven, however
The demand for headsets isn't strong, at least not yet. Apple has reportedly slashed its forecast for the Vision Pro headsets drastically, according to an analyst who covers the company. From an estimate of 700,000 to 800,000 units sold this year, Apple is now expecting a far lower range, between 400,000 and 450,000 units.
By comparison, rival Meta Platforms has sold tens of millions of its Quest headsets, but it has had to reduce prices along the way. These days, consumers can buy a Quest headset for just a few hundred dollars. It might be a hard sell, even for businesses, to justify paying a significant premium for Vision Pro headsets even if they do think they are superior.
And while there is a potential market for business buyers, I think Cramer is overplaying it. Companies don't need high-priced headsets to review large purchases or to do what-if scenarios.
Plus, adoption of the headsets would change business processes, requiring user training, and additional software could be needed to integrate them with a company's existing systems. It likely wouldn't be as simple as just strapping on a headset and continuing with regular workflows. There are extra costs and resource constraints 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 might not make a big difference in the company's earnings.
Apple has generated a mammoth $382 billion in revenue over the trailing 12 months. For the Vision Pro to account for even 1% of the top line, the company would need to sell more than 1 million of them per year at their current price tag. That could be a tall task, especially when Meta's devices might offer a much cheaper alternative for prospective buyers.
There are a lot of reasons to like Apple. It has a loyal following of customers, its services business continues to grow and generate record sales, and the company gushes cash and recently announced an incredible $110 billion stock buyback plan.
Those are all reasons to remain bullish on the company. The Vision Pro could prove to be a good bet for Apple, but it's far too early to expect that to be a significant growth driver for the business in the long haul, and investors should be careful not to set their expectations too high.
