Munster Considers Apple A 'Central Player In The Next Wave'

Apple Inc. AAPL’s in the vanguard of innovation, and some consider it unlikely to concede its lead any time soon.

“Over the next few years, Apple will be a central player in the next wave and maintain its track record of disruption while maintaining profitability,” Loup Ventures analyst Gene Munster wrote in a Wednesday note.

CEO Tim Cook inspired optimism with eager earnings-call comments surrounding investments in augmented reality, machine learning and autonomy.

Good News

Apple is focused on autonomy as a “core technology” and augmented reality as the “foundation of an upcoming paradigm shift in computing,” Munster said.

The latter is expected to disrupt various sectors from education to business to entertainment, and Apple is setting itself up to capitalize on emerging trends with its soon-to-be-released iOS 11. Cook said the AR-supportive software will hit hundreds of millions of users, a figure notably north of consumers with AR-enabled Androids, Munster noted.

At the same time, Cook intimated Apple’s pursuit of autonomous technology for non-vehicular purposes, another theme expected to be vastly profitable.

“Our takeaway is that autonomous technologies shouldn’t be limited to an Apple car,” Munster said, noting belief in Apple’s continued interest in the project but consideration of other opportunities to penetrate the market, including licensing.

Even as the firm invests more heavily in autonomy and AR, it’s racing to compete with Alphabet Inc GOOGL GOOG and Amazon.com, Inc. AMZN in machine learning for object tracking, language interpretation and face detection.

“Apple’s unique approach is that its ML platform easily integrates with iOS and ARKit development,” Munster said.

Stock Valuation

He attributed the 6-percent value pop on Tuesday’s earnings to Apple’s beats in guidance and services, as well as 9-percent year-over-year growth in June iPhone units, but he doesn’t expect the positivity to endure.

Munster expects the stock to drop in the near term, driven by widespread adoption of the “buy on iPhone rumors and sell on launch date” strategy, as well as waning optimism about the newest phone’s potential to drive annual unit growth.

At time of publication, shares of Apple were up 5.63 percent at $158.50.