- Apple's iPhone sales are likely to exceed expectations.
- Apple is making key investments in high growth areas.
- Machine learning and big data are the future growth drivers.
Apple (NSDQ:AAPL) sells one of the most sought after smartphones on the planet. Investors tend to use iPhone sales as a gauge for the potential performance of Apple. However, in an uncharacteristic move, Apple decided not to announce first week sales for the new iPhone 7 line. This immediately triggered talk in investor circles about Apple trying to hide poor sales figures.
Apple’s iPhone sales figures can’t keep growing year-on-year. However, I don’t think that hitting ‘a wall” of sales growth would affect Apple immediately. The huge demand for the iPhone 7 suggests that we might see another record-breaking year.
Move Towards Artificial Intelligence
Apple has made a series of telling investments over the last 18 months which provide insight into the direction Tim Cook wants to take the company in. To elaborate, they acquired Augmented reality firm Metaio in May 2015 and Machine Learning firm Perception in September 2015. Apple has been quick to notice that the future of technology isn’t hardware but AI, automation, machine learning and experiences (augmented reality).
The general consensus is that the Apple Watch hasn’t received a warm reception. This is because it isn’t a must-have device…yet. Apple purchased a personal health company named Gliimpse in August of 2016. Taking all their other acquisitions into account, this indicates that Apple wants to make a big splash in the multi-trillion dollar healthcare industry and the Apple Watch is a key part of that.
One of the most exciting aspects of big data and machine learning is that it will pave the way for an acceleration in technology like we have never seen before. We had the industrial revolution, and we are on the verge of an AI revolution. Apple has made a series of investments in order to be readily prepared to capitalize and lead the way.
If you thought the first iPhone launch was big, this is something completely different.
Moreover, the rate at which Apple is buying up these companies shows us that there is a lot of R&D going on behind the scenes.
Samsung’s issues with the Galaxy Note 7 couldn’t have come at a better time. The "exploding battery" issue is likely to hurt their brand in the long term. It has already slowed down the huge marketing push for the Note 7. As a result, we are likely to see better than expected sales for the iPhone 7 Plus.
It is worth noting that Alphabet Inc. (NSDQ:GOOGL) is another company which is investing heavily in software, big data and AI. In fact, they have purchased 14 companies dealing in the aforementioned industries over the past 12 months alone.
Apple has another growth opportunity. Apple has been investing in its content production in order to use it as a way of selling more hardware. They were able to secure exclusive deals with top artists such as Drake and buy the rights to James Corden’s carpool karaoke. There is even the talk of Tidal Acquisition being on the horizon. Apple also understands that content is one of the best ways to maintain their brand power.
Moreover, Apple is making big movements into the mobile payments space after opening up Apple Pay to more merchants. In the past, one had to own a piece of property in order to rapidly grow their business. We are moving into a fast approaching age where controlling essential software and experiences will make the biggest difference. And Apple is well placed to take full advantage.
Also Read: Will Apple Inc. Deliver Blowout Q4 Earnings?
In conclusion, look towards Apple’s software when deciding on whether to include it in your portfolio. That is where the next growth opportunity lies and would make the biggest difference going forward. I am going to place my neck on the line and state that the iPhone sales will be record-breaking and we will see better than expected performance in the gulf states and emerging markets. Apple is likely to hold onto the sales figures until their next earnings call and enjoy a big bump in Apple stock price.
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