Tag: Apple Inc. (AAPL)

Investor Alert: Are These 11 Back-to-School Stocks Making Big Moves?

Posted on by The INO.com Team

The end of summer and the onset of fall usually mean one thing in the United States — it’s time to replenish supplies and head back to school. This also translates to wardrobe refreshes and gadget upgrades. The average planned back-to-school spending per household in the United States has gradually increased year-over-year to $848.9 in 2021, with electronics or computer-related equipment emerging as the biggest category.

While stressed American consumers have been forced to go bargain hunting to squeeze out the maximum possible value from money for bare essentials so that more of it can be set aside in favor of outdoor experiences instead of manufactured goods, the trend is unlikely to be significantly impacted even by the seismic shifts in the consumption ecosystem.

In fact, since the supply chain disruptions in the aftermath of the pandemic, concern for stockouts has only pulled back-to-school sales have increasingly been pulled forward to the end of July, compared to the conventional peak during the beginning of August. Prime Week by Amazon.com, Inc. (AMZN) has also done its fair bit to catalyze that shift.

Given the above, we have shortlisted a few relevant apparel/fashion/luxury, grocery, and technology stocks below that are expected to benefit from back-to-school sales to determine if they are worth buying in the aftermath of the sales event and ahead of the holiday season.

Apple Inc. (AAPL)

The technology and consumer electronics giant, which has a history of revolutionizing products like the personal computer, smartphone, and tablet, has begun scripting the next key chapter in its success story with the announcement of its first product in the AR/VR market, the Apple Vision headset, which will sell for $3,499 when it is released early next year.

Despite its 7.9% dip during the past month, AAPL’s stock has gained 22.2% over the past six months. While the business boasts excellent profitability, in view of its stretched valuation in the face of frigid trade relations between the U.S. and China, AAPL’s manufacturing hub and key market, investors should wait for a better entry point.

Walmart Inc. (WMT)

Sam Walton, founder of the largest grocer in the world, built the company on a no-frills approach aimed at making groceries and other products more affordable. With 60% of its revenue in the U.S. coming from the grocery segment, the retail giant’s focus on value through “everyday low prices” has helped it become relatively immune to the seismic shifts in the consumption ecosystem.

WMT’s stock has dipped slightly over the past month but has gained 11.7% over the past six months. With core PCE at 4.3%, indicating stretched budgets and high borrowing costs in the foreseeable future, WMT is best positioned to capture the upside from “modest improvement” in sales of big-ticket and discretionary items like electronics during the Back-to-School season.

Target Corporation (TGT)

TGT sells an assortment of general merchandise and food items to its guests through its stores and digital channels. With product categories such as apparel and accessories, beauty and household essentials, food and beverage, and home furnishing and décor, the budget retailer has converted its 1900+ stores into mini-malls offering a range of “cheap chic” items.

Due to the recent miss in revenue and a not-so-optimistic outlook for the holiday season, TGT’s stock has lost 9.5% over the past month. However, the slump has also brought the stock to a more attractive valuation, which could protect investors from downside risks and a potential upside from a mid-term recovery in consumer confidence and market sentiment.

Ross Stores, Inc. (ROST)

ROST operates two brands of off-price retail apparel and home fashion stores, Ross Dress for Less (Ross) and dd’s DISCOUNTS, with the latter offering in-season, name-brand apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 70% off department and discount store regular prices every day.

ROST’s shares have gained about 5% over the past month and 8.5% over the past six months. Given its healthy profitability, investors could consider buying the stock to capitalize on a rally during Back to School and the holiday season.

Dollar General Corporation (DG)

As a discount retailer, DG offers merchandise, including consumable items, seasonal items, home products, and apparel.

DG’s stock has plummeted 7.4% over the past month and 27.6% over the past six months. In view of its bleak prospects, investors are advised to stand by until sentiments improve before investing in the stock.

Logitech International S.A. (LOGI)

Headquartered in Lausanne, Switzerland, LOGI designs, manufactures, and markets products that connect people to working, creating, gaming, and streaming worldwide. The company offers accessories, such as mice, keyboards, webcams, and other accessories for mobile devices. The company sells its products under the Logitech, Logitech G, ASTRO Gaming, Streamlabs, Blue Microphones, and Ultimate Ears brands.

Despite a 4.3% dip in the past month, LOGI’s shares have gained 24.2% over the past six months. While the business boasts excellent profitability, investors could wait for the pendulum of personal consumption to swing from services back in favor of high-ticket discretionary goods before buying into it.

Crocs, Inc. (CROX)

CROX designs, develops, and markets casual lifestyle footwear and accessories for women, men, and children, containing Croslite material, a proprietary, molded footwear technology. The company’s segments include North America; Asia Pacific; Europe, the Middle East, Africa, and Latin America (EMEALA); and the HEYDUDE Brand.

CROX’s stock has lost 7.8% over the past month. While the decently profitable business is well-positioned to benefit from increased expenditure on outdoor expenses, investors could wait for further valuation comfort before taking a long position in the stock.

Dillard's, Inc. (DDS)

DDS is a fashion apparel, home furnishings, and cosmetics retailer. The company’s operating segments include its retail department stores and a general contracting construction company.

DDS’ stock has gained 5.6% over the past month. Despite the recent price gains, its excellent profitability at a decent valuation means that investors could benefit from further upside in the stock.

Levi Strauss & Co. (LEVI)

The well-known apparel company designs and markets jeans, casual wear, and related accessories for men, women, and children under the Levi's, Signature by Levi Strauss & Co., Denizen, Dockers, and Beyond Yoga brands.

LEVI’s stock has lost 5.9% over the past month and 22.4% over the past six months. While the sentiment has been improving lately, investors would be wise to wait for its valuation to improve before deciding to add the stock to their portfolio.

Abercrombie & Fitch Co. (ANF)

As an omnichannel specialty retailer of apparel, personal care products, and accessories for men, women, and kids, ANF sells its offerings primarily through its digital channels, company-owned stores, and various third-party arrangements.

ANF’s stock has surged 26.3% over the past month and 68.3% over the past six months. Given its excellent track record and profitability, investors could consider investing in the stock.

Shoe Carnival, Inc. (SCVL)

SCVL is an omnichannel family footwear retailer that offers customers an assortment of dress, casual, and athletic footwear for men, women, and children.
SCVL’s stock has plummeted 15.9% over the past month. While valuations have become more attractive, investors are advised to wait for the outlook to improve before acquiring a stake in the business.

NVIDIA (NVDA) vs. Advanced Micro Devices (AMD): Which Stock Is Proving to Be the Better Long-Term AI Buy

Posted on by The INO.com Team

After its earnings release on May 24, the Santa Clara-based graphics chip maker NVIDIA Corporation (NVDA) stole the thunder by becoming the first semiconductor company to hit a valuation of $1 trillion.

NVDA has also blown away Street expectations ahead of its quarterly earnings release on August 23, with profits for the current quarter expected to be at least 50% higher than analyst estimates and the momentum expected to continue in the foreseeable future.

On the other hand, since its humble beginnings as a supplier for Intel Corporation (INTC), Advanced Micro Devices, Inc. (AMD) has come a long way. During its earnings release for the second quarter, despite persistent weakness in the PC market, the company’s result topped analyst estimates.

While NVDA has carved its niche and cornered a significant share of the GPU domain through advancements in parallel (and consequently accelerated) computing which began back in 2006 with the release of a software toolkit called CUDA, Chair and CEO Dr. Lisa Su is widely credited with AMD’s turnaround and transition from being widely dismissed due to performance issues and delayed releases to being the only company in the world to design both CPUs and GPUs at scale.

The New (Perhaps Only) Game in Town

As a general-purpose technology, such as the steam engine and electricity, Artificial Intelligence (AI) that has already been touching and influencing all facets of our life, including how we shop, drive, date, entertain ourselves, manage our finances, take care of our health, and much more.

However, late in November of last year, when OpenAI opened its artificial intelligence chatbot, ChatGPT, to the general public, all hell broke loose. The application took the world by storm. It amassed 1 million users in five days and 100 million monthly active users only two months into its launch to become the fastest-growing application in history.

The generative AI-powered application’s capability to provide (surprisingly) human-like responses to user requests equally fascinated and concerned individuals, businesses, and institutions with the possibilities of the technology. A large language model or LLM powers ChatGPT. This gives the application the ability to understand human language and provide responses based on the large body of information on which the model has been trained.

NVDA is reaping the rewards for all that invisible work done in the field of parallel computing. Parallel computing was ideal for artificial neural networks' deep (machine) learning. As a result of that head start in the AI tech race, its A100 chips, which are powering LLMs like ChatGPT, have become indispensable for Silicon Valley tech giants.

To put things into context, the supercomputer behind OpenAI’s ChatGPT needed 10,000 of NVDA’s famous chips. With each chip costing $10,000, a single algorithm that’s fast becoming ubiquitous is powered by semiconductors worth $100 million.

However, AMD isn’t too far behind either. According to Dr. Su, Data Center is the most strategic piece of business as far as high-performance computing is concerned. AMD underscored this commitment with the recent acquisition of data center optimization startup Pensando for $1.9 billion.

At the premiere, AMD’s ambitions to capitalize on the AI boom were loud and clear, with the launch of MI300X (a GPU-only chip) as a direct competitor to NVDA’s H100. The chip includes 8 GPUs (5nm GPUs with 6nm I/O) with 192GB of HBM3 and 5.2TB/s of memory bandwidth.

AMD believes this will allow LLMs’ inference workloads that require substantial memory to be run using fewer GPUs, which could improve the TCO (Total Cost of Ownership) compared to the H100.

The Road Ahead

The optimism surrounding both companies is justified.

With NVDA’s presence in data centers, cloud computing, and AI, its chips are making their way into self-driving cars, engines that enable the creation of digital twins with omniverse that could be used to run simulations and train AI algorithms for various applications.

On the other hand, AMD has also been training its guns to exploit the burgeoning AI accelerator market, projected to be over $30 billion in 2023 and potentially exceed $150 billion in 2027.

AMD is one of the few companies making high-end GPUs needed for artificial intelligence. With AI being seen as a tailwind that could drive PC sales, the company announced plans to launch new Radeon 7000 desktop GPUs at its quarterly earnings release. It is being speculated that the GPU will come with two 8-pin PCIe power connectors and four video out ports, including three DisplayPort 2.1 and one HDMI 2.1.

Caveats

AMD existed as both a chip designer and manufacturer, at least until 2009. However,  significant capex requirements associated with manufacturing, amid financial troubles in the wake of the Great Recession, compelled the company to demerge and spin off its fab to form GlobalFoundries Inc. (GFS), which has been focused on manufacturing low-end chips ever since.

Today, both NVDA and AMD operate as fabless chip companies. Hence, both companies face risks of backward integration by companies such as Apple Inc. (AAPL), Amazon.com, Inc. (AMZN), and Tesla Inc. (TSLA) with the wherewithal to develop the intellectual capital to design their own chips.

Moreover, almost all of the manufacturing has been outsourced to Taiwan Semiconductor Manufacturing Company Ltd. (TSM), which has yet to diversify significantly outside Taiwan and has become the bone of contention between the two leading superpowers.

With geopolitical risk being the potential Achilles heel for both companies, their efforts toward geographical diversification also receive much-needed political encouragement through the Chips and Science Act.

Dr. Su, who also serves on President Biden’s council of advisors on science and technology, pushed hard for the passage of the Act. It is aimed at on-shoring and de-risking semiconductor manufacturing in the interest of national security by setting aside $52 billion to incentivize companies to manufacture semiconductors domestically.

Bottom Line

Given its massive importance and cornucopia of applications, it’s hardly surprising that Zion Market Research forecasts the global AI industry to grow to $422.37 billion by 2028. Hence, this field has understandably garnered massive attention from investors who are reluctant to miss the bus on such a watershed development in the history of humankind.

Hence, in view of product diversification, increasing traction in the GPU segment, and relatively higher valuation comfort, investors in AMD could benefit from more sustained upside potential compared to NVDA.

US Bond Market Teeters on the Brink of Collapse – Seek Refuge in These 4 Stocks

Posted on by The INO.com Team

Last week, in line with broad expectations on the Street, Federal Reserve Chair Jerome Powell announced the unanimous decision by the FOMC to raise key interest rates by another 25 bps. With this move, the central bank has raised the benchmark borrowing cost to 5.25%-5.50%, ratcheting it up from nearly 0% in about 16 months.

With a 2.6% rise in inflation, down from a 4.1% rise in Q1 and well below the estimate for an increase of 3.2%, and an annualized increase of 2.4% in the gross domestic product in the second quarter, topping the 2% estimate, there is increasing belief in the Market that Jerome Powell and his team at the Federal Reserve may be on the cusp of achieving the elusive “soft landing.”

In Mr. Powell’s words, “The staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession.”

However, ECB raised interest rates by a quarter percentage point shortly after, citing persistent inflation. In such a scenario, despite increased optimism, businesses are expected to remain weighed down by high borrowing costs, and economic activity is expected to remain stifled due to relatively scarce credit.

Hence, there is still a significant probability that in order to overcompensate for the infamous “transitory” call that caused the Fed to arrive (really) late in its fight against demand-driven inflation, the central bank may be sowing the seeds of economic stagflation.

Moreover, with every increase in benchmark interest rates, a selloff of long-duration fixed-income instruments, such as the 10-year treasury notes, gets triggered, which causes a slump in their market value and a consequent increase in their yields. This also increases the benchmark 30-year mortgage rates, thereby depressing demand and deepening the crisis in which real estate has lately been finding itself.

After benchmark 10-year yields jumped by as much as 15 basis points above the key 4% level, Peter Schiff, CEO and chief economist at Euro Pacific Asset Management, warned of a crash in Treasuries. He has also predicted the benchmark 30-year mortgage rates to soon hit 8%, a level last seen in 2000.
Mr. Schiff’s apprehensions have also been echoed by David Rubenstein, co-founder of The Carlyle Group, who expressed his concern regarding the fate of commercial real estate as millions of people stay home and companies try to figure out what to do with empty offices.

An increase in borrowing costs would not just raise the cost of servicing the $32.7 trillion national debt; significant markdowns prices of legacy bonds and an inability by borrowers to service them due to economic slowdown could crush the loan portfolios of struggling banks and make them go the way of the dodo, such as the Silicon Valley Bank and the First Republic Bank.

With the Bank of Japan’s policy tweak of loosening its yield curve control sparking widespread shock in the markets that have been teetering on the brink of collapse, there is a material risk that an apparently resilient economy could find itself regressing into a full-blown recession just as Jerome Powell’s colleagues at the Federal Reserve have stopped forecasting it.

With HSBC Asset Management’s warning that a U.S. recession is coming this year, with Europe to follow in 2024, gaining credibility with each passing day, investors increasing their stakes in fundamentally strong businesses could be a time-tested method to navigate Mr. Market’s wild mood swings between unbridled euphoria and manic depression.

Here are a few stocks that are worth considering amid this backdrop:

Apple Inc. (AAPL)

According to a recent note from Fairlead Strategies, the technology and consumer electronics giant could witness a major upside in its stock. According to the agency, the stock could jump to $254 by the end of 2024.

AAPL, which has a history of revolutionizing products like the personal computer, smartphone, and tablet, has begun scripting the next key chapter in its success story with the announcement of its first product in the AR/VR market, the Apple Vision headset, which will sell for $3,499 when it is released early next year.

Regardless of any near-term and temporary softness and slowdown, a compounding machine such as AAPL, which boasts a sticky user base with a retention rate of over 90%, assures the company of adequate cash flow through repeat purchases and upgrades.

Moreover, AAPL’s board authorized $90 billion in share repurchases and dividends. It spent $23 billion in buybacks and dividends in the March quarter and raised its dividend by 4% to 24 cents per share.

Through relentless share repurchases, AAPL increased the existing shareholders' stake by decreasing its float, thereby increasing the remaining shares' intrinsic value (and consequently the price) without a proportional rise in market capitalization.

Johnson & Johnson (JNJ)

JNJ has been around for 135 years and is a worldwide researcher, developer, manufacturer, and seller of various healthcare products. The company operates through three segments: Consumer Health; Pharmaceuticals; and MedTech.

Over the past three years, which have been turbulent, to say the least, JNJ’s revenue has grown at a 6.7% CAGR. During the same period, the company also registered EBITDA and total asset growth of 7.7% and 8.1%, respectively.

Despite flagging sales of Covid 19 Vaccines, JNJ’s reported sales during the fiscal year 2023 second quarter increased by 6.3% year-over-year to $25.53 billion. During the same period, the company’s adjusted net earnings increased by 6.5% and 8.1% year-over-year to $7.36 billion and $2.80 per share, respectively.

In addition to its robust financials, the relative immunity of its demand and margins to potential economic downturns make it an attractive investment option for solid risk-adjusted returns.

Walmart Inc. (WMT)

In a previous discussion, we deliberated on how, despite inflationary pressures and online retail altering brick-and-mortar stores in today’s economy, budget retailers, such as WMT, have been relatively immune to the seismic shifts in the consumption ecosystem.

In fact, WMT has attracted new and more frequent shoppers, including younger and wealthier customers, who are turning to Walmart for both convenience and value. Consequently, according to its earnings release for the first quarter of the fiscal year 2024, the big-box retailer surpassed expectations for both earnings and revenue, with sales rising by nearly 8%.

Encouraged by the strong performance, WMT also raised its full-year guidance. It anticipates consolidated net sales to rise about 3.5% in the fiscal year. It expects adjusted earnings per share for the full year will be between $6.10 and $6.20.

WMT’s sales have reflected the shift toward groceries and essentials, with the former accounting for nearly 60% of the annual U.S. sales for the nation’s largest grocer. In fact, WMT’s grocery business helped to offset weaker sales of clothing and electronics, as sales of general merchandise in the U.S. declined mid-single-digits, while sales of food and consumables increased low double-digits.

Another bright spot for the retail giant has been growth in online sales, which jumped 27% and 19% year-over-year for Walmart U.S. and Sam’s Club, respectively. According to Rainey, curbside pickup and home delivery of online purchases fueled the growth.

Far from being complacent, WMT has been doubling down on initiatives, such as reducing and optimizing packaging and leveraging AI/ML to increase the efficiency of its operations.

Duke Energy Corporation (DUK)

As an energy company, DUK operates through two segments: Electric Utilities and Infrastructure (EU&I) and Gas Utilities and Infrastructure (GU&I).
Over the past three years, DUK’s revenue increased at a 5.4% CAGR, while its EBITDA has increased by 4.2% CAGR over the same time horizon.

On July 13, DUK announced its quarterly cash dividend of $1.025 per share of common stock, an increase of $0.02, and $359.375 per share on its Series A preferred stock, equivalent to $0.359375 per depositary share, payable on Sept.18, 2023, to shareholders of record at the close of business on Aug.18, 2023.

DUK currently pays $4.10 per share of common stock as annual dividends, which have grown for the past 11 years and at 2.5% CAGR over the past five years. Through the consistent return of capital, DUK provides adequate income generation opportunities for investors to help them tide over economic uncertainty.
On July 6, at Amazon Air Hub, DUK unveils Kentucky's largest utility-scale rooftop solar site, consisting of over 5,600 photovoltaic panels. It will feed up to 2 megawatts of solar power directly onto the electric distribution grid.

Utility companies such as DUK provide essential services that remain relevant and in demand regardless of economic inconsistencies.

NVIDIA (NVDA) Mirrors Apple's Success, Unleashing Another Stock Surge – Is There Still a Chance to Buy?

Posted on by The INO.com Team

Artificial Intelligence (AI) has been the flavor of the season so far, driving up share prices of tech giants as they focus more on AI. This has resulted in the resurgence of the Nasdaq Composite, which gained more than 30% year-to-date. NVIDIA Corporation (NVDA) is at the forefront of this AI revolution, and investors’ interest in the stock led to its shares gaining more than 200% year-to-date.

NVDA founder and CEO Jensen Huang earlier this year said, “AI is at an inflection point, setting up for broad adoption reaching into every industry. From startups to major enterprises, we are seeing accelerated interest in the versatility and capabilities of generative AI.”

Last month, NVDA became the sixth company to surpass the $1 trillion market capitalization. Its revenue and earnings in the first quarter beat Street estimates. Its revenue topped analyst estimates by 10.3%, while its earnings came 18.8% above the consensus estimate. The company reported record data center revenue of $4.28 billion during the first quarter.

NVDA is garnering investors’ interest due to its leadership and expertise in AI. Given the growing popularity of ChatGPT, the generative AI industry is expected to witness robust growth. NVDA is a leader in advanced AI chips required for generative AI. Apart from generative AI, there is a growing demand for accelerated computing.

The company’s graphic processing units (GPUs) are used in supercomputers, data centers, and drug development. Its GPUs are used as accelerators for central processing units (CPUs). Founder and CEO Jensen Huang said, “The computer industry is going through two simultaneous transitions – accelerated computing and generative AI.”

“A trillion dollars of installed global data center infrastructure will transition from general-purpose to accelerated computing as companies race to apply generative AI into every product, service, and business process,” he added.

NVDA is boosting the production of its entire data center range of products like H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand, and BlueField-3 DPU to meet the rising demand for AI technology.

Melius Research analyst Ben Reitzes said that NVDA reminds him of Apple Inc. (AAPL). He said, “NVDA is the obvious flagship AI company, whose decisions over the last two decades have positioned it for long-term benefits.”

“With a full-stack approach that, in our experience, tends to deliver an outsized profit share in the industry for longer than expected once the ball starts rolling downhill due to developer support and becoming an industry standard,” he added. The analyst has a Buy rating on the stock with a price target of $625.

For the second quarter of fiscal 2024, NVDA’s revenue is expected to be $11 billion, plus or minus 2%. Its non-GAAP gross margins are expected to be 70%, plus or minus 50 basis points.

Here’s what could influence NVDA’s performance in the upcoming months:

Disappointing Financials

NVDA’s revenue for the first quarter ended April 30, 2023, declined 13% year-over-year to $7.19 billion. Its non-GAAP operating income fell 23% year-over-year to $3.05 billion. The company’s non-GAAP net income declined 21% over the prior-year quarter to $2.71 billion. In addition, its non-GAAP EPS came in at $1.09, representing a decline of 20% year-over-year.

Favorable Analyst Estimates

Analysts expect NVDA’s EPS for fiscal 2024 and 2025 to increase 136.9% and 35.6% year-over-year to $7.91 and $10.71. Its fiscal 2024 and 2025 revenue is expected to increase 60.9% and 27.8% year-over-year to $43.39 billion and $55.46 billion.

For the quarter ending July 31, 2023, NVDA’s EPS and revenue are expected to increase 305.8% and 65.1% year-over-year to $2.07 and $11.07 billion, respectively.

Stretched Valuation

In terms of forward EV/EBITDA, NVDA’s 58.50x is 298.3% higher than the 14.69x industry average. Likewise, its 25.35x forward EV/S is 752.6% higher than the 2.97x industry average. Its 56.39x forward non-GAAP P/E is 139.3% higher than the 23.56x industry average.

High Profitability

In terms of the trailing-12-month net income margin, NVDA’s 18.52% is 821% higher than the 2.01% industry average. Likewise, its 23.53% trailing-12-month EBITDA margin is 174.8% higher than the industry average of 8.57%. Furthermore, the stock’s 6.65% trailing-12-month Capex/Sales is 181.8% higher than the industry average of 2.36%.

Bottom Line

Given the vast generative AI and accelerated computing market, NVDA is in a sweet spot. Its earnings are expected to more than double this year, driven by rising chip sales for data centers and artificial intelligence. Demand for GPUs from gaming is also likely to recover this year.
Moreover, the company is well-positioned to benefit from the chip demand from autonomous cars, cryptocurrency mining, and adopting the metaverse.
However, given its stretched valuation, it could be wise to wait for a better entry point in the stock.

Apple (AAPL) vs. Meta Platforms (META): The VR Battle Begins!

Posted on by The INO.com Team

Technology and consumer electronics giant Apple Inc. (AAPL), which has a history of revolutionizing products like personal computers, smartphones, and tablets, has of late been in the thick of things.

AAPL announced its partnership with the game-development software maker Unity and unveiled a slew of other new products. Its year-ahead product roadmap includes the new Apple Watch Ultra along with the traditional fall launch lined up for the iPhone 15. The company is also expected to ship new M3-powered laptops and OLED-screen iPads by next year.

However, last month, AAPL, which boasts a sticky user base with a retention rate of over 90%, grabbed headlines by announcing its entry into the augmented reality/virtual reality (AR/VR) market with the Apple Vision Pro headset, which is set to hit the shelves early next year.

However, shortly before AAPL’s big release, incumbent technology heavyweight Meta Platforms, Inc. (META) also made its presence felt by unveiling its latest VR headset, the Quest 3, on June 1.
With the scheduled September 27 release of the successor to the Quest 2 headset, which was released in the fall of 2020, META expects to cement its position in the intensifying battle for a greater share of the steadily growing immersive technology pie.

With the battle lines in the AR/VR wars firmly drawn, we attempt to compare the weapons of both contenders to speculate which one is likely to come out on top.

Design

As with all of the other offerings in its product portfolio, AAPL has placed the user at the center of the design philosophy for the Vision Pro Headset. It has done away with the need for controllers, freeing users to navigate the AR/VR space with eyes, hands, and voice.

The headset is also made with two micro-OLED displays that let people around the users see their eyes on the outside while they are in the AR mode but not when they have switched to VR, thereby intelligently signaling availability.

The Quest headset comes with ergonomic controllers for interaction, with hands-free options. It has three cameras on the front that may improve visibility of the real world for users wearing the headset and interacting with applications. However, unlike the Vision Pro, the headset comes without a glass front.

AAPL’s Vision Pro is designed with two padded straps with cushioning on the back for added comfort. In contrast, META’s Quest 3 is 40% thinner than its predecessor and is fitted with three straps for weight distribution.

With the battery of the Vision Pro being external, corded, and compact enough to be placed and carried in pockets, it is apparently safer than Quest 3, which has its battery built into the headset.

Specifications

The Vision Pro comes with a micro-OLED display that delivers a 4K resolution for each eye with a refresh rate of 90 Hz. In comparison, the Quest 3 LCD comes with a resolution of 2,064 x 2,208 per eye and a refresh rate of 120Hz.

Regarding the chips powering the headset, Vision Pro comes with the Apple M2 processor, which can also be found in MacBook Air, MacBook Pro, and iPad Pro devices. However, the brand-new and purpose-built R1 chip would be used to process camera information. The Qualcomm Snapdragon XR2 Gen 2 chip will power the Quest 3.

The Vision Pro will have up to 16 GB RAM with 64 GB storage, while the Quest 3 offers 12 GB RAM with 128 GB storage. Both headsets claim to last up to two hours on a full charge. However, the former can be used without the battery while plugged into a socket.

Software & Support

The Vision Pro comes with a new operating system known as Vision OS that also lets users interact with familiar iOS and macOS apps in a mixed-reality environment. In comparison, the Quest 3 runs on Android open-source software.

While both headsets enable users to watch movies, browse the internet, and work using a virtual keyboard like one would using a physical computer, the Quest 3 is optimized for a fully immersive virtual reality gaming experience with haptic feedback technology that gives users a sense of touch.
Moreover, while the application software ecosystem is expected to be gradually populated as more game developers jump on board, Quest 3 offers more games from its VR store.

Cost

Compared to the Quest 2, which had a starting price of $299 during its release in the fall of 2020 and was later raised to $399 in July 2022, the Quest 3 would be available for $499.

However, the Vision Pro is in a league of its own as it would sell for an eye-watering $3,499 when it is released early next year.

In addition, AAPL has been forced to make significant cuts in its forecasted production for the Vision Pro due to design complexities resulting in apparent production difficulties for the Chinese contract manufacturer Luxshare.

These delays could also negatively impact AAPL’s plans to begin work on two new and bifurcated product lines, one second-generation high-end model that will continue the original Vision Pro and the other a lower-end version.

Bottomline

While AAPL’s Vision Pro triumphs concerning design and features, META scores higher in pricing, availability, and suitability for gaming applications.
Hence, as with its other offerings, AAPL has the better product for those who feel that the quality is worth the wait and the hefty price tag.