There’s one reason why Apple stock is a screaming buy right now, and it is not the Vision Pro. Many iPhone users are expected to upgrade their devices when the company launches its next-generation smartphone. Apple’s growing iPhone average selling price means that it could see a nice jump in revenue.
Harsh Chauhan for The Motley Fool:
Wedbush Securities analyst Dan Ives has raised his price target on Apple stock from $205 to $220, claiming that the company is on track to win big from its next iPhone. According to Ives, there are around 250 million iPhones in an upgrade window as they are more than four years old. As a result, the next iteration of the iPhone, which should ideally be launched in the third quarter of 2023, could turn out to be a big growth driver for Apple.
Consumer Intelligence Research Partners pointed out last month that the average selling price of an iPhone jumped to a record $988 in the first quarter of 2023, an increase of 12% over the prior year. Apple achieved this remarkable feat at a time when the global smartphone market was in a state of decline.
Assuming Apple manages to increase its iPhone average sales price to $1,000 when it launches the next iteration of its flagship product, the company’s potential revenue opportunity from the device could be a massive $250 billion (based on the 250 million iPhones that are in an upgrade window as per Wedbush).
Apple generated $200 billion in iPhone revenue over the past four quarters, which means that a combination of strong pricing power and a big installed base of users in an upgrade window could drive significant revenue growth for the company.
MacDailyNews Take: AAPL shares continue to be laughably undervalued.
If you’re an Apple user and somebody offers you $10,000, but the only proviso is they’ll take away your iPhone and you’ll never be able to buy another, you’re not going to take it. If they tell you if you buy another Ford car, they’ll give you $10,000 not to do that, you’ll take the $10,000 and you’ll buy a Chevy instead. It’s an incredibly valuable utility. – Warren Buffett
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