Analyst Insights: Apple Inc. (AAPL) Makes AI Waves with No-Longer-Secret Project Titan, Tesla Inc (TSLA) Set to Outperform its OEM Competition


Famed Apple Inc. (NASDAQ:AAPL) guru Gene Munster offers a bullish slice of the Apple pie regarding its officially confirmed Project Titan, an artificial intelligence (AI) project that has been in the works for quite some time. Munster offers a glimpse into the future, analyzing how the tech giant can convert autonomous driving technology into a strong product roadway. Likewise, Bernstein sees fit to shed caution on Tesla Inc (NASDAQ:TSLA), gaining new conviction on the electric car giant’s prospects at capturing market share against its OEM rivals. Let’s explore:

Apple Confirms ‘The Mother of All AI Projects’

Apple CEO Tim Cook just divulged that the rumor mill has been spot-on with theories of Project Titan’s secretive existence, confirming the artificial intelligence-centric project in an interview with Bloomberg.

Apple enthusiast Gene Munster – divvying insights from his new research-driven, venture capital firm Loup Ventures – has written in the past regarding the tech giant’s self-driving car plans, acknowledging it certainly has not been “a well-kept secret.” Yet, “Apple’s public confirmation is noteworthy” nonetheless, as the analyst highlights, “Cook referred to the three specific areas: self-driving technology, the electrification of vehicles, and ride-hailing as ‘three vectors of change happening generally in the same time frame.’”

Munster’s real question regarding the core technology of autonomy, one which Cook has expressed intrigues him is one of product translation: “So, how will Apple turn the technology into a product?”

The way the analyst sees it, “There are two ways we see Apple potentially bringing its car technology to market. The first option would be to partner with a manufacturer to bring an Apple-branded car to market. The second option would be to focus on developing software and implementing it across as many car platforms as possible.”

Munster concludes confident as ever on the tech giant, anticipating a dual punch from Apple of partnering with a manufacturer and licensing its technology to auto makers.  “At the moment, Apple’s is likely pursuing both options under the R&D umbrella of project Titan. True to form, they’ll watch this market emerge and enter when the time is right – from both a product and a market standpoint,” surmises the analyst.

TipRanks analytics exhibit AAPL as a Strong Buy. Out of 31 analysts polled by TipRanks in the last 3 months, 26 are bullish on Apple stock while 5 remain sidelined. With a return potential of nearly 13%, the stock’s consensus target price stands at $165.48.

Tesla Gets an Upgrade

Tesla shares were on a close to 5% rise yesterday and Berenberg analyst Alexander Haissl has decided to join the bullish parade, upgrading from a Hold to a Buy on TSLA while bumping up the price target from $193 to $464, which represents a 23% increase from where the shares last closed. The electric car giant has a lot of good news to dole out, between achieving a five-star rating for its all-electric Model Xin all crash safety tests held by the National Highway Traffic Safety Administration (NHTSA), rendering the car “the safest SUV ever” and a sighting of the new mass-market Model 3 revealing folded back seats in the model.

For Haissl, the sharp left away from the sidelines to the bulls stems from a dismissal of traditional original equipment manufacturers (OEMs) as an overshot risk, now finding the intimidation factor to not be as massive as what was portrayed.

When assessing the realm past “skeleton” designs and frail progress updates, OEMs competitive edge simply will not stand up in the race to create top mass-market electric vehicles (EVs). Therefore, without a way to bring the heat for the kind of production Tesla brings to the table, at least not for the next three years as Haissl takes apart the situation, this leaves the window wide open for Tesla to rule the market share leaderboard, outclassing OEM rivals.

Ultimately, “Tesla’s disruptive potential encompasses the vehicle, the entire production process and the product-to-market strategy. Once the business reaches scale, the cash generation potential is significantly superior to existing premium OEMs, with cash flow per vehicle more than 50% higher. For traditional OEMs, more drastic measures to create shareholder value may need to be considered – including, for example, spinning out their EV divisions to better focus on technology development and improve capital allocation. However, this would first require a transition to dedicated production lines rather than integrated production,” Haissl contends.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, one-star analyst Alexander Haissl is ranked #3,216 out of 4,578 analysts. Haissl has a 64% success rate and faces a 0.1% loss in his annual returns. However, when recommending TSLA, Haissl earns 4.7% in average profits on the stock.

TipRanks analytics indicate TSLA as a Hold. Based on 19 analysts polled by TipRanks in the last 3 months, 6 rate a Buy on Tesla stock, 7 maintain a Hold, while 6 issue a Sell on the stock. The 12-month average price target stands at $285.27, marking a 24% downside from where the stock is currently trading.