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Apple's 'Reality Pro' Platform Will Be Worth $20 Billion, Says Morgan Stanley As It Raises Its Apple’s Target To $190

Apple's 'Reality Pro' Platform Will Be Worth $20 Billion, Says Morgan Stanley As It Raises Its Apple’s Target To $190
Morgan Stanley, a financial services company, increased its price target for Apple to $190 in anticipation of the company releasing a category-defining AR and VR headset and so significantly expanding the market.
According to Morgan Stanley, its overall projection model for the company now takes Apple AR headset estimates into account in advance of the company's WWDC announcements on June 5, 2023. As a result, it has raised its target price from $185 to $190 due to its expectations for the headset.
"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."
According to Morgan Stanley analysts, Apple's headset will significantly contribute to the expansion of the market for such products. Apple is anticipated to boost what is known as the Total Addressable Market (TAM), or the number of consumers contemplating headsets, much like it did with the iPhone.
"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 forecast is partially based on the fact that "Apple has historically driven TAM expansion in new markets it enters." The analysts' "checks over the last two years" further support this assertion, which "show sharp increases in AR/VR venture capital activity, R&D quality and quantity, and corporate and consumer interest in the space."
Morgan Stanley also reminds investors that, in a survey conducted in 2021, three times as many respondents stated they would prefer to purchase an AR/VR device from Apple than from Google, who came in second.
Facebook/Meta was ranked sixth in the same study, just below Samsung, Amazon, and Microsoft. Though further information won't be released for almost four months, Meta just pre-announced its upcoming Meta Quest 3 ahead of Apple's event.

Christopher J. Mitchell

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