Bank of America: Apple's AR ambitions will be game-changing

Bank of America believes that Apple's ambitions in augmented reality could be "game-changing."

On Tuesday, Bank of America analyst Wamsi Mohan upgraded Apple's stock rating from neutral to buy. He thinks there's optimism about the prospects for Apple's AR/VR headset, which is likely to be available in late 2022 or early 2023.

Augmented reality (AR) technology allows people to see digital effects in the real world, while virtual reality (VR) technology can immerse people in the digital world.

In a note to clients, he wrote:

We think this technology will be game-changing as it enables many new applications that require higher-performance hardware and higher access speeds.

In Mohan's view, the final introduction of a headset that supports AR technology or even VR technology may bring several benefits to Apple.

First, he pointed out that in the past, Apple's price-to-earnings ratio would go higher before launching major products. When this helmet is about to come out, it will have a positive boost to its stock price.

At the same time, Apple may "charge a premium" for this device, which could indirectly help Apple increase revenue, including benefiting from selling more AR/VR-enabled immersive applications.

Finally, augmented reality could also expand the market for Apple's other flagships, with Mohan predicting that consumers may opt for iPhones that support powerful apps.

This is not the first institution to be optimistic about Apple because of the AR/VR business.

Wall Street News previously mentioned that a week ago, Morgan Stanley Katy L. Huberty team mentioned in the latest research report that with the development of Apple's self-driving cars and AR/VR products, Apple's valuation may further rise. Huberty particularly emphasized that the AR/VR business will become an important engine for Apple's performance growth in the future.

Mohan also wrote:

As applications become more feature-rich, the bandwidth required to support them also grows significantly.

To get the most out of these apps, consumers will need iPhones that have high-speed processors and support high-speed 5G connections.

Mohan believes that consumers may start to replace iPhones more frequently than in the past, a trend that will support the sales trend of Apple products in fiscal 2023.

Despite the stock price falling at last night's close, Mohan raised Apple's share price target from $160 to $210. When its stock price rises to $182.86, Apple's valuation will reach $3 trillion.

Over the past 6 months, Apple's stock price has risen by more than 37%.