Bank of America upgrades Apple to buy, sees nearly 20% upside on ‘game-changer’ augmented reality plans

Bank of America AppleWith companies increasingly turning their attention to the metaverse—a virtual world that could eventually replace today’s internet, Bank of America particularly likes tech giant Apple, predicting that its stock can get a major boost from plans to launch a new augmented reality headset by early 2023.

While Apple has historically been quiet about new products, Bank of America predicts the iPhone maker will release a new headset for augmented reality (AR) and virtual reality (VR) by the end of 2022 or early 2023.



This new technology will be a “game changer,” Bank of America analyst Wamsi Mohan said in a recent note, adding that it should lead to a large run-up in Apple’s stock.

The firm is the latest among several on Wall Street to raise expectations for Apple next year, upgrading the stock to a “buy” rating with a target of $210 per share, implying over 20% upside from current prices.

The launch of a headset would also help boost iPhone sales in 2023, not to mention shorten the iPhone replacement cycle in the future—due to the need for higher connectivity like 5G to use AR/VR applications, Mohan pointed out.

Apple will not only “be able to charge a premium” for the headset, he said, but it should also boost the company’s services revenue as customers spend more money on immersive apps compatible with augmented reality.



Shares of Apple fell slightly again on Tuesday, down by around 0.4%, even as Bank of America and other firms have been recently upgrading the stock.

CRUCIAL QUOTE:

“The company is typically not the first to introduce new features or technology; however, it does take pains to launch a product that is refined and that users would want to buy,” Bank of America’s Mohan said.

KEY BACKGROUND:

Shares of Apple have outperformed the market in 2021, up 34% this year compared to the benchmark S&P 500’s 24% gain. Other major Wall Street firms have also recently raised their price targets for the stock, including Morgan Stanley last week and JPMorgan on Monday.

BIG NUMBER: $2.8 TRILLION

That’s how much Apple is now worth in market capitalization. Earlier this week, the iPhone maker nearly passed the $3 trillion mark, but if the stock rises again, Apple could well become the first company to achieve a valuation that high.

WHAT TO WATCH FOR:



Ever since Facebook rebranded to Meta in September 2021, there has been growing interest in the metaverse, a vision for a fully virtual world accessed by headsets or smartphones where people can work, play and socialize. While the metaverse is still mostly conceptual, a handful of tech companies including Microsoft and Disney have already begun making investments in this space.

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