Payments, Credit and Electric Vehicles – The Key Takeaways from WWDC 2022 for Apple Investors (NASDAQ:AAPL)

Summary:

  • Apple rolled out several hardware and software improvements during WWDC 2022.
  • The company appears to be taking a soft approach to Project Apple Car by allowing Tesla’s competitors access to Apple’s operating system for electric vehicles.
  • Apple Finance could increase the value of the current device ecosystem and become a strong contender in consumer finance and payment processing.

Apple Inc. (NASDAQ:AAPL) unveiled a set of software and hardware updates at WWDC 2022 that could have implications for the company’s future growth. In this article, we’ll break down these announcements and analyze what they may mean from an investor’s perspective.

Here are the key WWDC updates important to investors:

  • New M2 chips
  • New MacOS – Ventura
  • Apple car game
  • Apple Finance

It’s important to keep track of strategic events, and in the chart below you can also see how product and strategic update history has influenced Apple’s stock price:

NasdaqGS: AAPL Stock Price History of Notable Events, June 10, 2022

Although most of these new services have been announced to investors well in advancethe company is just beginning to implement them.

Deployment of M2 chips in devices

The new redesigned MackBook Air/Pro will be available from July and will contain its new M2 chip. Apple consumers are going to get a performance boost as the company claims that the chips offer approximately 18% more raw CPU performance over the M1 chips, along with a 35% increase in GPU performance.

For investorsthis means that Apple is getting even further ahead of Intel (NASDAQ:INTC) and AMD (NASDAQ: AMD). If customers are satisfied with the product and experience, and see a noticeable increase in performance from their devices, Apple may additionally increase market share in the appliance segment. While that may mean little given the growth expectations already priced in for Apple, it could lead to future market share declines for Intel and AMD.

An inadvertent participant in this process may be Microsoft (NASDAQ: MSFT) Windows. As Apple and iOS hardware become more convenient, people will have more incentive to switch to Apple for day-to-day use, while having a separate console or PC for gaming or other uses.

Introducing Ventura – The New iOperating System

Ventura includes general operating system improvements and features that sync well across devices. Many features of the new version now have an API (connection) available for third-party developers, who can interact with applications to build better software.

Although Apple is hardly seen as a viable option for gamers, they seem to be attacking the market aggressively and have developed their own Metal3 API which aims to improve the quality of games.

For investorsthat means Apple compensates for supply chain and chip pressures by striving for quality on the software side.

See our latest analysis for Apple

Apple CarPlay vs. Tesla (NASDAQ: TSLA)

Apple Car Play allows users to integrate their iPhone with their car and is supposed to be compatible with 98% of American cars. The goal is to give users an enhanced system through their iPhone that will enable certain “smart” features.

While Car Play initially only worked with the dashboard, Apple is preparing to integrate the next generation with all driver displays.

For investorsImportantly, Apple has been working with electric car manufacturers to create an operating system that will be available for their electric vehicles. Traditional automakers have always struggled to build a good EV OS, and Apple will be able to provide that as software leverage against Tesla., which has a fully proprietary operating system for their electric vehicles. In return, Apple can obtain a substantial amount of data by renting out its operating system to manufacturers, to improve their self-driving algorithms. Keep in mind that this process can take a long time before investors see a significant impact.

Apple Finance

Apple has been in the world of finance for quite some time and is now expanding the range of financial services.

Starting this month, the company will also release “tap to pay”, for contactless payments on iPhone, where no additional hardware or payment terminal is needed. The first thing investors think about in this situation is that this move will likely affect payment processors such as To block (NYSE:SQ), as they require a physical terminal for processing, unlike Apple.

Notably, Apple released the pay later service that allows you to spread your payment over 4 equal installments over 6 weeks, no interest and no charge. The last item here is important to provide better customer service and increase the value of Apple devices.

The service works out-of-the-box with Apple Pay, and the company is currently collaborating with MasterCard (NYSE:MA) to issue payment credentials, while Apple handles underwriting and lending through the new subsidiary called Apple Financing.

When we have a business that has over $50 billion in cash on the balance sheet, engaging in financial services like auto insurance, payment processing, and short-term revolving consumer credit becomes a good use of this capital.

Additionally, as we mentioned earlier, moving into the electric vehicle space and collecting driver data can allow the company to create a tailored car insurance service that separates good drivers from bad drivers. – based on performance history.

For investorsthis means that new Apple services may affect partners and competitors at first, but the company tends to move these services internally, creating an additional revenue stream for the company and increasing the overall value of its ecosystem of products.

Conclusion

Apple is a large, if not mature, company that should generate growth. While all of these updates are exciting for investors, they are more likely to serve to deliver what was already valued in the stock, rather than create new value.

The possible exception to this is the financial arm which, if allowed to take off, can turn the company into a major conglomerate.

We also need to be aware of the risks and find 2 warning signs for Apple which you must take into account.

Simply Wall St analyst Goran Damchevski and Simply Wall St have no position at any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials.