Apple Teases Metaverse AR Plans, Stocks Jump

Apple Inc teased its metaverse ambitions on Thursday as CEO Tim Cook spoke about the expansion of the company’s augmented reality apps, drawing a strong reaction from investors.

The company has 14,000 AR apps on its App Store, and Cook suggested that number would grow with new investment.

“We see a lot of potential in this space and are investing accordingly,” Cook said, in response to a question about his plans for the metaverse, an umbrella term that typically refers to shared virtual world environments that people can access through Internet.

Apple analyst Ming-Chi Kuo and Bloomberg reported that Apple plans to introduce an AR headset by next year with glasses to follow later. Apple has yet to publicly acknowledge those plans.

Comments from Cook on Thursday and quarterly earnings and sales estimates helped push Apple stock up nearly 5% in after-hours trading.

Apple’s services revenue jumped 24% to $19.5 billion in the latest holiday quarter, beating analysts’ estimates of $18.6 billion. The company added 785 million subscribers to its handful of paid services such as music streaming and games, up from 620 million a year ago and 745 million last quarter.

Cook separately on Thursday said Apple’s research and development efforts focus on the intersection of hardware, software and services.

“That’s where the magic really happens,” Cook said. “There’s quite a bit of investment in things that aren’t in the market at this point.”

An AR device could open many opportunities to increase subscriptions. Existing offerings for fitness workouts and video content could become more engaging with immersive AR experiences.

And as services and subscribers grew, Apple’s gross profit margins jumped above 40%, earning praise from analysts.

Metaverse-related services, such as AR apps, could reverse Apple’s revenue mix, said analyst Neil Shah of Counterpoint Research.

“There is a significant upside to Apple’s services business that could cross its iPhone over the next five years,” Shah said.

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