It’s been a tough slog for Apple (NASDAQ:AAPL) stock over the past year, with shares sinking over 30% at their worst. Even with a potential recession and more rate hikes to come, there are some reasons to believe that 2023 could be Apple’s most interesting year yet.
Indeed, there are some catalysts, tailwinds, and innovations that could help Apple stock to buck the trend and move higher, even without help from the broader market. I am bullish.
Indeed, true innovation can help power earnings, even when the consumer is feeling a bit spent. As 2023 progresses, I think Apple will show us that it’s innovating on many fronts.
A Few Innovations May Land in 2023
Recession or not, it’s shaping up to be a pretty exciting 2023 for Apple, with a few intriguing innovations that may land over the coming months. According to Morgan Stanley (NYSE:MS), which is quite bearish on the broader market, Apple is its top hardware stock for the year.
Sure, macro headwinds could weigh heavily on demand for the latest and greatest consumer tech. Still, Morgan Stanley sees four catalysts that could kick in this year. A services re-acceleration, “pent-up demand” for the next iPhone, a mixed-reality headset launch, and a Hardware-as-a-Service type of model.
Indeed, pent-up demand for iPhone is a catalyst that could help Apple offset most of the recession headwinds on the horizon. Over the past few quarters, supply-side woes have really weighed Apple down. Still, there’s a good chance that the supply headwinds of past quarters will result in some sort of push-forward in demand — the opposite of what we saw during early-2020 pandemic lockdowns.
Beyond iPhone 15, which may feature a titanium build, a services jolt and Apple’s much-awaited move into headsets could be a significant boon for the stock.
On the services side, a hardware subscription could be Apple’s biggest offering to date. It could “smoothen” out iPhone sales over time and could help consumers justify stepping up their purchases to a higher-tier iPhone, given easier-to-stomach monthly payments.
Apple may also have other services up its sleeves for the months ahead. This past week, Apple made headlines for progress with its prick-free blood glucose tracking capabilities that could be included in a future release of the Apple Watch. Such an innovation would make Apple one of the most exciting firms in the health space. Indeed, the medical device market is a fast-growing field that could be ripe for a disruptor like Apple to break into.
Apple may very well make a huge impact in the world of health, as it has in consumer hardware. In any case, such health innovations may pave the way for health-tracking services.
Only time will tell when Apple is ready to unveil such a breakthrough. Regardless, it’s an exciting time to be an Apple shareholder with all the potential innovations trickling out of the rumor mill of late.
2023: The Year of the Apple Headset?
Apple’s mixed-reality headset could be ready for an unveiling during its next WWDC meeting in the summer. Of course, there’s a risk that the launch could be delayed further. Apple is known for only launching products that are incredibly polished and ready for prime time.
In any case, I do think the odds are high that 2023 is the year that Apple unveils its next big hardware innovation to the world. Headsets are expensive, and the mixed-reality space is still nascent.
Further, such a headset is likely to have top-of-the-line hardware, which means the headset could be incredibly costly, if not costlier than an iPhone. As a result, the headset launch may be less awe-inspiring than the iPhone launch in 2007 and more akin to an iPad or Apple Watch launch — one that draws intrigue but takes a few years to gain mass adoption.
Regardless, Apple’s first splash into the headset world could cause many analysts covering the name to return to the drawing board again. The longer-term growth potential behind a headset is huge. The “metaverse” market could enjoy around 47% in CAGR through 2027, according to MarketsandMarkets.
Is AAPL Stock a Buy, According to Analysts?
Turning to Wall Street, AAPL stock is a Strong Buy. Out of 29 analyst ratings, there are 24 Buys and five Holds.
The average Apple stock price target is $171.94, implying upside potential of 13.3%. Analyst price targets range from a low of $125 per share to a high of $210 per share.
The Bottom Line on Apple Stock
Even if 2023 is another rough year for markets, Apple seems to have enough up its sleeves to separate itself from the pack. New innovations could inspire some to purchase the latest and greatest Apple product at the expense of other discretionary goods.
I view Apple as cheap at 24.9 times trailing earnings, even though the multiple is stretched from a historical standpoint. Given the company-specific tailwinds on the horizon, Apple may be ready to leave the rest of the market behind.