If there’s one stock that Warren Buffett loves, it’s Apple (NASDAQ:AAPL). Buffett has been one of the biggest champions of the technology giant in the last decade, and he’s put his money where his mouth is.
As of its most recent filing, 38.9% of his holding company Berkshire Hathaway‘s portfolio is accounted for by Apple stock. It’s far and away the biggest single investment in the Berkshire pot, with second place Chevron coming in at 11.19%.
The Apple share price has been increasing enormously for years, so Warren Buffett being a fan is understandable. However, I think its biggest growth years could still lie ahead.
The next iPhone
When looking at Apple, there’s a clear before and after — before the iPhone and after the iPhone. The growth of its shares since 2007 has come almost entirely on the back of its popular device.
Even the products that came after the iPhone have benefited from its success. The Apple Watch needs an iPhone, AirPods are designed to work best with iPhones, and even Macs now use iPhone technology.
The device’s success has been so great that the term ‘iPhone moment’ has been used to describe a breakthrough leap. Most recently, ChatGPT has been described as an iPhone moment for AI.
But in the realm of consumer goods, Apple could well have its own new iPhone moment. It’s currently readying an augmented reality/virtual reality (AR/VR) device for release in 2023. The company jumping into AR/VR could signal a seismic shift in an industry that has struggled to gain traction.
Currently, Meta is leading the VR space with its Quest line of headsets. However, it’s arguably the only company that has targeted a wide audience with a variety of use cases for its devices.
Meta hopes that people will use its headsets like we use smartphones today to socialise, work, and play. Whereas others, like Sony, have targeted the video game market with higher-priced devices that cater to a small niche.
Apple has one of the best track records of any company for developing products that achieve massive mainstream success. It’s very rare that the company invents something completely new. Touchscreen phones existed before the iPhone, tablets existed before the iPad, and wireless headphones were around long before AirPods arrived.
What the company does best is taking technology and packaging it in a way that appeals to as many people as possible… and charging a premium price for it.
A breakthrough for VR
A new AR/VR headset could be the best opportunity yet for the VR industry to garner a mainstream audience. The VR market was worth $21.83bn in 2021 and is expected to grow at a compound annual growth rate (CAGR) of around 15% to 2030. The arrival of Apple into this arena should fuel that growth.
There’s massive potential for AR/VR to be a big part of the future of human communication. I believe that AR and VR will eventually replace smartphones as we know them today. If that happens, the growth potential for the companies leading the market will be massive.
Given its track record, I believe Apple could be one of the companies to lead the charge. That’s why I’m buying shares regularly in 2023, hoping that doing so is akin to buying Apple shares in 2007.
