The last decade has been hugely rewarding for iPhone manufacturer Apple (AAPL). It kept on rising to become the world’s most valuable company, with the firm at one point reaching a market cap of just over $3 trillion. In its latest quarterly results, Apple broke multiple records by clocking-in an all-time high revenue of $123.9 billion.
But with that kind of success comes great expectations. The question now for investors is how does the company maintain its lofty valuation over the coming decade, and prevent itself from becoming a victim of its own high standards?
One strategy that Apple can pursue is to expand into new technologies and, with it, entry into new, fast-growing markets. Here, we’ll take a look at some of the options available to AAPL, and what that might mean for its fortunes in the next 10 years.
The Metaverse
There are few companies more perfectly poised than Apple to capitalize on the rise of the so-called metaverse.
Tim Cook, CEO of Apple, has stated that the metaverse – a hypothesized series of digitally-simulated 3D worlds that utilize virtual reality (VR) and applications from social media to create shared spaces where users can communicate and interact – is an area of interest for the business, with the company currently featuring over 14,000 augmented reality (AR) applications in its App Store at the present time.
Indeed, Apple is already working on a “mixed-reality” (MR) headset that could feature as a first-generation product offering for the nascent metaverse. The headset is rumored to blend various functions of existing AR and VR headsets into one device, with Apple’s high-end chip technology helping to create higher-resolution displays.
There are also suggestions that the company will create its own operating system for the headset, which could be further used to build a whole ecosystem of products on top of that, which could then be sold exclusively through Apple’s own App Store too.
Apple’s recent revelation that it has 1.8 billion active devices in play gives it a pretty wide customer base on which to sell additional products.
The global market for AR, VR and MR technologies alone is expect to rise from $30.7 billion in 2021, to $300 billion in 2024. The scope of potential products is also huge, with video gaming, video conferencing, live sports streaming and enterprise applications all expected to be an important part of the upcoming metaverse.
Given the firm’s established presence in the China market, Apple already has a significant advantage over its rivals such as Meta, Microsoft and Amazon, whose business in the region is nowhere near that of AAPL’s.
In fact, Apple took 21% of its segment operating income for the fiscal year 2021 from China, which boasts 3-times as many Internet users as the US. The metaverse is predicted to grow at an annual rate of 28% until 2028, which could mean a big revenue bump for AAPL over the coming years.
Source: Unsplash
Apple Car
If Apple’s move into the metaverse seems like a natural next-step for the technology company, its foray into the world of self-driving cars might not seem quite as obvious.
However, the firm’s expertise in the manufacture of microprocessors actually makes it a good fit for the autonomous electric vehicle (EV) space, even if it still has a lot of work to do to catch up with the competition.
The launch date for the Apple car has been delayed on a number of occasions, and is now thought not to be viable until at least 2028.Regardless, the opportunity for AAPL to disrupt another key growth industry should be an appetizing one for investors.
Research suggests the autonomous vehicle market was worth around $22 billion in 2021, and could increase at a compound annual growth rate of 22.75% every year, giving the space a value of $76 billion by 2027.
The industry is benefiting from a number of strong secular and economic tailwinds, including the global drive for net-zero carbon emissions, and the advanced state of battery-cell technologies.
Interestingly, Apple’s long-term presence in the EV market might have more to do with selling its other products than it does just autonomous cars. Reports have indicated that AAPL’s proposed design for its self-driving vehicle will feature a U-shaped passenger seating arrangement, with the interior possessing no steering wheel or gas pedal.
This hands-off driving setup seems to indicate that Apple’s vision for the vehicle is one that will prioritize the social aspect of the user experience, with the inner space being one oriented towards productivity and/or entertainment – and it’s not inconceivable that Apple could create a whole host of additional apps to cross-sell to owners that enhance this alternative experience too.
But no matter what kind of Apple car eventually rolls off the forecourt, the fact it’s expanding its range of products can only be welcome news for company shareholders and Wall Street analysts.
Don’t Discount The Smartphone Market
Apple didn’t create the most valuable suite of consumer products in history without being very, very good at its core competency – and that’s why it’s important not to overlook the company’s latest offering, the iPhone SE.
The firm’s most recent product – the 3rd generation iPhone SE – is AAPL’s budget-friendly 5G smartphone, which was launched this month at a slightly higher-than-expected $429 price point. Crucially, however, that’s still considerably cheaper than the average selling price of other 5G-enabled smartphones, which come in at around $643, according to latest market research.
Moreover, this budget-version of Apple’s 5G smartphone may have just come out at precisely the right time, with inflation rising and consumer spending on discretionary items about to wane. Indeed, the iPhone SE isn’t just cheap – it packs a fair punch in the technology stakes too, with the smartphone being powered by the A15 chip, which is also in Apple’s much more expensive iPhone 13 too.
This makes the iPhone SE the ideal choice for price-conscious buyers who want cutting-edge 5G connection and decent performance as well – but don’t mind missing out on the most advanced features such as high-resolution displays and the same kind of camera settings as more expensive models.
If this compromise product does appeal to a wide audience as expected, it could become a big revenue generator for Apple in the coming months. Some analysts believe it could top $20 billion in sales in its first year, shifting around 35 million units to eager customers.
The global market for smartphones is slated to reach $530 billion by the end of the 2020s – which should give Apple plenty of opportunity to maintain its position as the world’s premier enterprise for another decade or more.
How Much Will Apple Stock Be In 10 Years?
The bottom line is that while it’s difficult to pin down a share price for Apple in 10 years because the company may split its stock again, the valuation for Apple should be considerably higher. Indeed, it’s not inconceivable that Apple will be the first $5 trillion dollar company, offering an investment gain of over 100% from current share price levels. Indeed, it’s almost certain that the old high price, which correlated to a market cap of $3 trillion, will be left far in the rearview mirror over the next 10 years.
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