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The looming rise of spatial computing could pave the way for greater adoption of the metaverse that tech companies like Meta Platforms (META) are eager to break into. While the social media giant has since shifted more of its focus toward generative artificial intelligence (AI) with its Llama 2 large language model (LLM), the firm still has a strong desire to be there when computing makes its next big jump.
Undoubtedly, the rise of mobile computing has been profoundly profitable for Apple (AAPL). And there's likely still many years' worth of economic profits to be had as new iterations of the iPhone look to be released every year.
Although the iPhone remains a massive cash cow for the company, don't count on Apple to be complacent as the industry looks to rein in spending. The $2.8 trillion tech giant is already spending considerable sums on what it thinks could be the next big thing (spatial computing and perhaps generative AI). After the latest World Wide Developer's Conference (WWDC) this past June, Apple seems as confident as ever that the age of spatial computing may be upon us.
In the meantime, today's "Wonderlust" event will turn our attention back to the iPhone, the top device of the present. However, in the long term, it will probably be spatial computing (a top device of the future?) that dictates whether Apple can reinvent itself again and set the stage for more market-crushing gains over the coming years and decades.
Personally, I wouldn't bet against the firm, even as other analysts discount the potential of the company's move into the world of spatial computing.
Apple Stock: iPhone Event in Focus, but Don't Lose Sight of the Vision Pro!
At the end of the day, Apple seems to be the expert at disrupting its own business segments through new innovations. The company certainly seems to be the master of its own fate (although Meta is sure to keep Apple CEO Tim Cook on his toes!).
Whether the Apple Vision Pro has iPhone potential down the road, though, remains the big question investors should ponder. With the stock currently going for approximately 30 times trailing price-to-earnings (P/E), I'd argue the market has doubts about whether the company's move into spatial computing will be nearly as lucrative as its move into mobile computing more than 16 years ago.
As computing hardware becomes capable enough to power impressive immersive augmented and virtual reality experiences, it's going to be products like the Apple Vision Pro that could gradually cut into the turf of the iPhone. Still, the transition to another device category should be expected to take many years, perhaps even decades.
Further, it seems like spatial computers would be more disruptive to the Mac and iPad businesses than the iPhone. In any case, spatial computing and the metaverse are worthy trends in the tech scene that shouldn't be ignored, even as generative AI technologies hog the attention and investment dollars of investors.
A Strong AI Presence Would Make a Shift to Spatial Computing Smoother
At this juncture, it seems like Apple stock is being punished for its lack of skin in the AI game. These days, many innovators in the tech scene don't just want their AI plans known; they want them to be as loud and clear as possible. And on the surface, it seems like Apple may not be giving the field of generative AI as much love as it deserves, at least on a relative basis.
Apple may not have as much to say about generative AI tech as Alphabet (GOOG), Microsoft (MSFT), Snowflake (SNOW), or Salesforce (CRM). That makes it challenging to tell where in the pack Apple stands in the ongoing AI revolution. Given a relative lack of AI announcements, some analysts may be inclined to place the tech titan behind the pack. In reality, I think Apple may be neck and neck with its large-cap tech counterparts.
According to The Information, Apple is investing "millions of dollars a day" in training its AI. The iPhone maker also reportedly has its own advanced LLM named Ajax that could be every bit as capable as, if not better than, ChatGPT.
While I do not doubt the possibility that Apple has an AI chatbot that's more sophisticated than ChatGPT (let's not forget the firm has been hard at work improving its Apple Neural Engine over the years), it's really hard to tell exactly what the company is up to in the field of AI, given how secretive it tends to be with its various R&D projects.
In any case, capable generative AI seems like a must if the world is to make the move from traditional computing to spatial computing. At the very least, an advanced LLM could smoothen, if not accelerate, such a transition.
Conclusion
Just because a shift to new tech will take time doesn't mean investors should neglect the potential of Apple's Vision Pro in favor of the coming iPhone 15 launch. Given Apple's knack for playing the long game, I think truly long-term investors ought to give more love to the Vision Pro.
On the date of publication, Joey Frenette had a position in: AAPL , GOOG , SNOW , CRM . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
