Apple to Record Highs Ahead of WWDC?

Apple shares were shy of a new record high early Monday as markets were buoyed by the end of the debt ceiling debacle. Now the focus turns to what new releases the company could make later today.

VR or OS, What's More Important?

Apple will host its Worldwide Developers Conference starting later today, where it's expected to launch its "most ambitious" new production year: the long-awaited VR/AR headset, among other anticipated launches. The headset has been in development for years and would be the first major new product category since the Apple Watch in 2014. But with the recent drop in interest in the Metaverse, a virtual reality or augmented reality headset might go more the way of Google Glass than the iPhone.

The other potential major event would be the release of a new operating system across the platform since the headset would be expected to launch with its own OS and require compatibility with existing devices. The new xrOS hints that the mixed-reality headset is likely to be called XR Pro, though Reality Pro is also a potential name that has been speculated. The new iOS17 is expected to include several new features, with reference to the latest trends, including AI features, which could get more coverage.

New Growth or Top of the Mountain?

The new VR/AR headset is expected to start selling at $3,000 when the global economy faces headwinds and consumers see their wallets pinched. Also on the higher end of pricing is the expected launch of a new 15-inch MacBook Air, which is expected to debut the company's M2  processor.

The headset launch is seen as an attempt by CEO Tim Cook to finally launch an industry-defining product to scale like the iPod and iPhone, and could be the most pivotal launch of his career. Bank of America analysts are expecting a modest pick-up of the device, with just 200K units in the first year. A similarly priced and featured product is Microsoft's Hololens, which has found interest as a niche application. Cook is betting on bringing the tech to the masses, suggesting that mixed reality will be as important as the internet.

Unlike Meta, which had trouble launching its own VR headset, Apple has not invested as significant a proportion of its capital in the new technology. Traditional investors, such as Warren Buffet, appear to be comfortable doubling down on their Apple bets based on substantial free cash flow and growth in the boring, albeit much more profitable, services division.

Double Top Following Flag Until Record High

Apple's share price might have completed a flag pattern at $117, with the measured move length exposing $222 in price-discovery mode. Below there, bulls might face respective price action at the $200 handle. If the event fails to impress, Apple could reverse for the short or long term. In the former case, bulls must defend the swing low at $157 and $143 if the flag area gets penetrated, while in the latter, sliding under the flag low could see extended declines. For the time being, the stock is forming a double top.

Key Takeaways

Apple's shares are close to a new record high as investors wait for the release of the long-awaited VR/AR headset, among other anticipated launches, during WWDC. The new XR Pro headset is expected to launch with its own OS and be priced at $3,000. BOA expects modest sales of around 200K units in the first year, but CEO Tim Cook believes mixed reality will be as important as the internet. Additionally, there may be a launch of a new 15-inch MacBook Air featuring a new M2 processor. While some investors are doubling down on their Apple bets, others remain cautious, given the pricey new technologies and current global economic conditions.