Normally I wouldn’t concern myself with a single analyst upgrade of a stock, even if it’s Apple Inc. But BofA Securities recent research report is a different story. The analyst, Wamsi Mohan, began the report with, “We expect Apple to introduce an augmented reality/virtual reality headset, either by the end of 2022 or early 2023. We view this technology as a game-changer.”
Virtual reality headsets are a vital component of the metaverse, an immersive virtual existence in which consumers can interact, shop, play games, do their banking and eventually almost everything we do now in the real world.
As an investment theme, the metaverse has gotten a lot of attention in 2021 but by all accounts, a fully functioning virtual world is a long way off – a decade at least. That is the main reason I haven’t written about it - it’s too early to risk investment capital on related stocks.
An Apple VR headset might change that. While there are plenty of reasons to complain about Apple – the devices are expensive, they keep changing the charger attachments, the headphone jack disappeared, just to name three – we can still trust on the company to design sleek, attractive products that provide expansive functionality.
The release of an Apple VR headset would unleash a huge software developer community to begin building the metaverse. Tens of thousands of software engineers now creating apps for Apple operating systems would turn their attention to VR-related programming, accelerating the viability of a virtual world.
Mr. Mohan raised his rating on Apple from “neutral” to “buy”, and his 12-month price target from US$160 to US$210. The stock is currently about US$170. I don’t, however, intend this report to be a recommendation to buy the stock, at least not yet. I’m just reporting that the metaverse, with all its extensive socioeconomic and investment implications, may be upon us a lot sooner than we previously thought.
-- Scott Barlow, Globe and Mail market strategist
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