Apple (NASDAQ:AAPL) stock has already rallied sharply this year. So, is it too late to invest in Apple now? It’s a tough call, as some critics might express doubts about the company’s upcoming foray into virtual reality (VR) hardware. On the other hand, Apple’s recently announced deal with a famous chipmaker could prove to be a major revenue generator.
Since Apple is such a huge and highly revered company, there’s always the concern that Apple could fall from grace. For instance, Loop Capital analyst Ananda Baruah downgraded Apple to “hold” after the company “reduced its iPhone shipping for the June quarter.”
Okay, so Apple will encounter hiccups and missteps just like any other company will. This doesn’t mean Apple shouldn’t take risks and try out audacious ideas. In the end, Apple has always rewarded loyal shareholders with superior returns, so investors have no reason to bail on the company now.
| AAPL | Apple | $175.43 |
Will Apple’s VR Gear Be a Problem for AAPL Stock?
Since AAPL stock has run higher this year so far, any failure on Apple’s part could prompt a share-price pullback. Concern about Apple’s upcoming mixed-reality headset, which is expected to be introduced sometime this year, makes sense.
Granted, it won’t be an easy task for Apple to make VR goggles look cool. Other tech titans have attempted this and failed to make an appreciable dent in the VR hardware market. Will Apple succeed where others didn’t?
I propose that it will be challenging but not impossible. Remember, Apple created and then proceeded to dominate new markets with the Macintosh computer, the iPod, the Apple Watch and of course, the iPhone.
Besides, Apple doesn’t need to succeed in this niche market. It’s not make-or-break for Apple. The company can always fall back on its other products, along with Apple’s Services category revenue, which has exhibited year-on-year growth.
Apple Strikes a 5G Hardware Deal
Only time will tell whether Apple’s venture into VR hardware will be a hit or a flop. One foray that will almost certainly be a winner, however, is Apple’s collaboration with chipmaker Broadcom (NASDAQ:AVGO).
No exact time frame or dollar figure was revealed, as this is a “new multiyear, multibillion-dollar agreement.” Still, it’s huge news as Apple stands to generate vast revenue from developing 5G hardware with Broadcom.
If you’re interested in the geek-speak, Apple and Broadcom plan to develop “5G radio frequency components — including FBAR filters — and cutting-edge wireless connectivity components.” The companies aren’t starting from scratch, by any means, as Broadcom already has a “major” 5G component production facility in Colorado.
If you agree with me that 5G has a strong future, then this development provides another reason to invest in Apple now. Indeed, I’d consider this news item to be much more impactful than anything related to Apple’s upcoming VR headsets.
So, Is It Too Late to Buy AAPL Stock?
Are you tempted to take profits and bail on your share stake in Apple? The choice is yours, but don’t discount Apple’s relentless drive to grow and innovate.
Sure, Apple’s mixed-reality gear might not be a blockbuster hit. At least, we can commend Apple for taking risks and trying out a variety of ideas.
Long-term, AAPL stock will likely move higher as long as Apple continues to advance cutting-edge products and services. Therefore, it’s definitely not too late to start or add to a share position in Apple.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.