Apple (AAPL) Endgame: Software, Services, and Self-Driving Mobility Fleets

Loup Ventures' Gene Munster believes Apple's new alliance with Volkswagen will further strengthen the company's optionality.


Gene Munster, managing partner at venture capital firm Loup Ventures has been covering Apple (NASDAQ:AAPL) for the last 14 years, a respected analyst on the Street for having bet on Apple before the first iPhone hit the market; back when Apple’s stock price was floating under $2. Present day, the tech guru is at it again, anticipating big themes of the future hinge upon autonomy as well as his new investment thesis: Apple as a service.

For context, Munster sees Apple in a strong standing for appreciation down the line on back of what he praises as a “long-term, sustainable investing paradigm.” In Apple’s new evolution, Munster looks to four key pillars: solid iPhone, Services, cash returned to investors, as well as optionality between augmented reality, content, health, and autonomy.

Consider it “significant” that the New York Times recently unveiled the tech titan has inked a self-driving agreement with Volkswagen to manufacture driverless electric T6 Transporter vans. These Transporter vans will evolve into Apple’s self-driving shuttles for employees utilizing the titan’s autonomous sensor suite; and the move brings Munster to point out the fourth peg of his thesis, optionality. “Autonomy is one component of optionality that is currently not reflected in Apple’s share price along with AR, original content, and health,” highlights the research analyst.

Especially as Apple gets that much closer to becoming a ‘trillion dollar baby,’ Munster cannot help musing whether the shares have potential to jump even more. The analyst believes, “Yesterday’s New York Times report on Apple’s deal with Volkswagen to build autonomous vehicles gives us some clarity regarding the optionality component to Apple as a Service. Investors are currently not giving Apple shares credit, given it’s nearly impossible to model. Eventually, that tide will change, and we expect shares of AAPL to benefit from this opportunity.” Moreover, based on the New York Times article, the analyst believes that with most of the Apple’s car team keyed into this hyped project, he anticipates the project should “progress quickly.”

“We believe Apple’s endgame is a software and services platform enabling autonomous mobility fleets. […] given the complexities of manufacturing a car (just ask Tesla) and the size of the opportunity, it makes sense for Apple to partner their way to autonomy,” continues Munster, who concludes expecting the tech titan “will have a considerable amount of input and control over the design and experience of the end product.”

TipRanks suggests sentiment is mixed between optimism and caution when it comes to the big AAPL machine and its market prospects. Out of 28 analysts polled in the last 3 months, 16 are bullish on AAPL stock while 12 remain sidelined. With a return potential of 3%, the stock’s consensus target price stands at $195.00, indicating some apprehension is baked into these analysts’ expectations.

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