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Shares of Apple (AAPL 0.41%) were rising on Monday, up 2.4% as of 10:33 a.m. ET, about half a percentage point above the Nasdaq.
Tech stocks got a follow-through rally on top of Friday’s surge, which came after some economic data pointed to a still-strong labor market but with decelerating wage growth and moderating services demand. That’s what the Federal Reserve wants to see — an economic cooling to tame inflation, but not so much of one that it affects the job market.
In addition to the positive macroeconomic news, a leading financial publication published a piece about Apple’s upcoming AR/VR headset, which it expects will be released in the next few months. An exciting product launch could be the catalyst sending Apple’s beaten-down shares above the market today.
Today, Bloomberg reported that Apple now plans to launch its first headset this spring, just before its Worldwide Developers Conference in June. Bloomberg also points out that the company has had a VR headset in development for seven years, and that it initially planned a launch in 2019 before a series of delays.
Most recently, the company sought to release the headset in January, but it looks as though a final delay will put the headset launch sometime midyear. Bloomberg reports that the company will release the headset under the name Reality Pro, that it will have its own operating system (called xrOS), and that the company has already sent the prototype to a few select software developers.
On top of Bloomberg’s reporting, The Information recently reported that a distinguishing feature of the new headset will be a battery pack that attaches to the user’s waist, which will enable the headset itself to be lighter than those of rivals.
Delays or not, it appears investors are excited about a new product launch. Apple hasn’t really released a brand-new type of device since the Apple Watch back in 2015, or, if you count AirPods as a device, 2016; while there were initially some skeptics, the Apple Watch has made a meaningful impact on revenues and profits for the iPhone giant, as have AirPods, despite Apple’s already-massive size. Therefore, a new VR headset could continue Apple’s streak of successful and meaningful new product launches.
Given the recent tech sector sell-off and concerns over a potential recession this year, Apple has fallen by nearly a quarter over the past year, and its P/E ratio has compressed from the high 20s to around 21.5 today.
Whether that is cheap enough to be considered a bargain for Apple stock remains to be seen, and it may depend on how bad an upcoming recession will be — if we even have one. However, a lower stock price combined with a new device launch certainly could be a bullish setup for Warren Buffett’s favorite stock in 2023.
Billy Duberstein has positions in Apple and has the following options: short January 2023 $210 calls on Apple. The Motley Fool has positions in and recommends Apple. His clients may own shares of the companies mentioned. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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