Goldman Sachs Sees Increased Likelihood The iPhone 8 Will Include AR Content

Goldman Sachs’ Simona Jankowski expressed increased confidence Apple Inc. AAPL would include 3D sensing, among other major new features, in the iPhone 8.

The analyst maintained a Buy rating on the company, while raising the price target from $133 to $150.

AR Content Likely

Jankowski mentioned that industry datapoints indicate “the inclusion of 3D sensing functionality is increasingly likely, which could enable a robust augmented reality (AR) feature set that we believe will be a key differentiator for the 10-year anniversary iPhone.”

The analyst sees this as a “significant step-up” in terms of innovation, as compared to the previous two product cycles, especially when see along with the potential meaningful form factor change that has been enabled by the shift to an OLED display.

See Also: Super 8: Apple's Next iPhone Cycle Something To Look Forward To

Specifically associated with the AR technology, Jankowski pointed out that optical component vendor, Lumentum Holdings Inc LITE, mentioned during its Q4 earnings call it had “shipped our first revenue into what we believe could be a highvolume mobile device application.”

Growth

In addition, Lumentum’s management believes 3D sensing would be a meaningful growth opportunity for the company in the coming years, highlighting the market could be worth more than $1 billion over time.

Jankowski estimates “Apple’s installed base entering the iPhone 8 product cycle will be more than double its installed base entering the iPhone 6 product cycle three years ago.”

The CY2017 and CY2018 iPhone unit estimates have been raised from 227.3 million to 230.0 million and from 231.5 million to 235 million, respectively.