Latest News 

Apple's stock could be a 'table-pounder' but it'll take years to know for sure how successful the Vision Pro really is, analysts say

Posted By:






© Apple
Apple Vision Pro Apple

  • Apple unveiled its new mixed-reality headset, the Vision Pro, on Monday.
  • The stock could be a ‘table-pounder,’ some analysts said. Others think the ‘good news’ is already priced in.
  • It will take years to know for sure how successful the Vision Pro really is, tech investor Gene Munster said.

Apple unveiled its new mixed-reality headset, the Vision Pro, on Monday. The stock rose nearly 2% to hit an all-time high before the product was announced, but is now trading 0.76% lower at $178 after hours. 

The tech giant, whose market capitalization currently stands at $2.85 trillion, unveiled its long-awaited first spatial computer during its Worldwide Developers Conference. The device combines artificial intelligence with augmented reality and launches Apple into competition with Meta’s lineup of AR/VR headsets. 

Bank of America says AI could have a $15.7 trillion impact on the global economy by 2030 — and enrich investors in these 13 industries along the way

  • Artificial intelligence (AI) may be having its “iPhone moment,” according to Bank of America. 
  • The firm shared four key reasons why the technology will continue to take off.
  • Here are 13 industries that BofA believes are most levered to AI — and how to invest in each.

When Apple co-founder Steve Jobs announced the original iPhone on January 9, 2007, shares of what’s now the world’s most valuable company were trading at $2.81. Sixteen years later, Apple has sold a mind-boggling 2.2 billion iPhones worldwide, and its stock is up 54-fold.

Since the iPhone changed the world, many products that promised to be the next big thing flopped. Bank of America is betting that artificial intelligence (AI) will be an exception. In fact, the firm has cited an estimate from PwC that AI’s economic impact could be $15.7 trillion by 2030.

“Artificial Intelligence is about to revolutionize everything,” wrote Haim Israel, the head of BofA’s Global Thematic Research team, in a recent note. “This could be the ‘iPhone moment’ for AI.”

Although Bank of America’s point about AI being transformational is clear, its iPhone-AI analogy is imperfect. Apple’s smartphone was the avenue by which billions of users easily accessed the internet via mobile devices, but the iPhone wasn’t that exciting new world itself.

A better parallel for the iPhone is ChatGPT — an intelligent, user-friendly chatbot that’s pushed AI into the mainstream, similar to how the iPhone brought smartphones to the masses. And like smartphones existed prior to the iPhone, AI predates ChatGPT by many years. The difference is that chatbots can now understand content and create human-like dialogue, Israel noted.

“We are at a defining moment — like the internet in the ’90s — where Artificial Intelligence (AI) is moving towards mass adoption, with large language models like ChatGPT finally enabling us to fully capitalize on the data revolution,” Israel wrote.

4 reasons why AI will be a game-changer

Bank of America believes that this a transformational moment for AI for four main reasons: it’s democratizing data like never before, it’s been adopted at an unrivaled rate, it’s developing at an exponential rate, and it has countless commercial use cases.

ChatGPT and other large language model (LLM) chatbots have brought data and information to the masses, regardless of their training or experience, Israel wrote. While all the implications of this development are unclear, empowering people through data should boost productivity.

The mind-bending capabilities of ChatGPT caused the chatbot to be adopted overnight. Israel noted that Open AI’s chatbot reached a million users in just five days and hit 1 billion visits in just three months, which is three times faster than TikTok and 10 times quicker than Instagram. That sustained interest suggests that AI isn’t a fad and has staying power.

AI is developing at a mind-bending rate, as the computing power needed to train its datasets has doubled every three months in the past decade while the number of parameters for LLMs has grown 1,900-fold in the past decade, according to Bank of America. At that rate, AI could be a million times more powerful than ChatGPT is now in the next 10 years, Israel wrote.

More capable AI models would certainly create possibilities that are currently unimaginable.

However, AI isn’t without its share of critics, who have concerns from financial, environmental, and ethical perspectives.

Asking ChatGPT a question costs its creators up to 300 times more than it costs Google to search on its engine, Israel wrote. He added that AI takes lots of energy to train and noted that programming a model could produce five times the lifetime emissions of an average car. Also, many view AI as unethical or are skeptical about answers from chatbots.

13 industries that will benefit most from AI

Still, Bank of America is bullish about the impact of AI on business and believes every sector will be impacted, though some will be bigger winners than others. In early March, the bank shared a list of its 20 favorite stocks to buy ahead of the AI boom.

Investors looking for exposure to AI may want to consider companies in 13 industries that Israel and others at Bank of America think will get the biggest positive impact from the technology.

Below is BofA’s thesis for each of those industries. Along with the groups are their sector and examples of stocks or exchange-traded funds (ETFs) that Insider — not BofA — selected for investors looking to invest in AI-exposed industries.

1. Software development

Example investment: iShares Expanded Tech-Software Sector ETF (IGV)

Sector: Information technology

Thesis: “AI or large language models (LLMs) can help developers write code for program applications and software. It can also debug code and suggest improvements.”

Source: Bank of America

2. Semiconductors

Example investment: VanEck Semiconductor ETF (SMH)

Sector: Information technology

Thesis: “The emergence of AI and LLMs could represent one of the strongest upcoming drivers of semis. Computational requirements for running AI models are increasing due to the processing power needed to train them.”

Source: Bank of America

3. Data centers

Example investment: Global X Data Center REITs & Digital Infrastructure ETF (VPN)

Sector: Information technology

Thesis: “As data continues to grow at an exponential rate, more data centers are required to store that data.”

Source: Bank of America

4. Cybersecurity

Example investment: First Trust NASDAQ Cybersecurity ETF (CIBR)

Sector: Information technology

Thesis: “With the emergence of LLMs like ChatGPT, it is easier for threat actors with limited programming skills to generate code for cyberattacks e.g., legitimate-sounding phishing emails. Hence, ChatGPT and similar models are likely to have broad-based implications on the cybersecurity sector in terms of email security, identity security, and threat detection.”

Source: Bank of America

5. Search engines

Example investment: Alphabet (GOOGL)

Sector: Information technology

Thesis: “Traditional search engines could be replaced by chatbot applications like ChatGPT; however, it is likely that search engines are going to be used in conjunction with generative AI to improve the user experience.”

Source: Bank of America

6. Education

Example investment: Global X Education ETF (EDUT)

Sector: Communication services

Thesis: “LLMs could drive online learning, writing textbooks, and providing online learning modules.”

Source: Bank of America

7. Media

Example investment: Invesco Dynamic Media ETF (PBS)

Sector: Communication services

Thesis: “LLMs can be used for content generation e.g., writing news articles, social media posts, marketing content, story-writing, summarizing text, media planning, and advertising.”

Source: Bank of America

8. Music

Example investment: Warner Music Group (WMG)

Sector: Communication services

Thesis: “AI and LLMs can be used to transpose music, generate melodies, chord progressions, and lyrics. It can even analyze music and generate reviews and comparisons.”

Source: Bank of America

9. Legal

Example investment: DWF Group (DWF)

Sector: Communication services

Thesis: “LLMs can write legal documents and summarize legal cases. ChatGPT is even capable of writing legal essays that passed law exams.”

Source: Bank of America

10. Telemedicine

Example investment: Telemedicine & Digital Health ETF (EDOC)

Sector: Healthcare

Thesis: “AI can help doctors make more data-driven decisions that improve the patient experience. It can be used for remote patient monitoring, population health management using predictive analytics, reminding patients of health appointments, training junior doctors, and providing more accurate patient diagnoses.”

Source: Bank of America

11. Pharmaceuticals

Example investment: VanEck Pharmaceutical ETF (PPH)

Sector: Healthcare

Thesis: “AI can help with the initial screening of drug compounds to predict its success rate. It can further identify the right candidates for trials based on their medical history.”

Source: Bank of America

12. Banks

Example investment: SPDR S&P Bank ETF (KBE)

Sector: Financials

Thesis: “AI can help analyze the data that banks, diversified financials, and insurance companies have to conduct predictive analysis. AI could analyze an individual’s credit history and calculate the likelihood of default. These companies can also retain customers for longer by providing additional services based on their spending and financial activities.”

Source: Bank of America

13. Fintech

Example investment: Ark Fintech Innovation ETF (ARKF)

Sector: Financials

Thesis: “AI can help fintech companies automate the credit risk assessment process, detect bank fraud, increase safety, automate the customer service experience, and analyze user behavior.”

Source: Bank of America

14/14 SLIDES

Apple stock could be a “table-pounder” and the debut of its mixed-reality headset could drive up the company’s valuation dramatically — still, some analysts maintain that it will take years to know for sure how successful the new augmented reality headset will be, according to analysts. 

Load Error

“I understand why shares of $AAPL have pulled back 2% since the announcement. Vision Pro is something that investors will need to try before they believe. There are so many questions I have, that may take months to answer as content and applications build,” tech investor Gene Munster tweeted late on Monday.

 

Wedbush’s Dan Ives thinks Apple’s stock is a continued “table-pounder” and its Vision Pro debut is the company’s first step on artificial intelligence because developers will use the product to build AI-driven apps. 

“This is just starting the next leg from a services perspective as well as a mini supercycle. You could argue in the sum of its parts, this is a $3.5 trillion dollar valuation or more,” he told CNBC on Monday. 

Meanwhile, Goldman Sachs analyst Mike Ng said Apple’s stock could jump nearly 30% as the new gadget will draw in a new user base and encourage multiple purchases as it develops. 

He also said Apple has an “attractive” valuation now compared to its own history and relative to other mega-cap tech companies. 

“Apple’s success in premier hardware design and resulting brand loyalty has led to a growing installed base of users that provide visibility into revenue growth by reducing customer churn, lowering customer acquisition costs for new product and services launches, and encouraging repeat purchases,” he wrote in a note, according to Marketwatch. 

However, others like analysts at D.A Davidson think the stock has already priced in the “good news” from Vision Pro’s launch. 

“We believe there are important structural challenges for Apple when it comes to consumer adoption of AR/VR hardware, which could limit the near-term impact on its sales and profitability,” Tom Forte, a senior research analyst at the firm, wrote in a Monday note, per Marketwatch. 

Continue Reading