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Apple Vision Pro headset could have an 'iPhone moment': Analyst

Investors continue to gauge the potential of Apple's new Vision Pro VR headset announced at its Worldwide Developers Conference. Wedbush Managing Director and Senior Equity Analyst Dan Ives sits down with Yahoo Finance Live to explain why this headset could be a good move for Apple, C3.ai's position in the artificial intelligence space, and Tesla's driverless technology.

Video transcript

JULIE HYMAN: Let's talk about analysts' reaction to Apple's widely hyped but pricey Vision Pro headset. Morgan Stanley's Erik Woodring calling the device a quote, "show-me" story, needing killer apps to truly drive success. Others like JP Morgan's Samik Chatterjee calling the Vision Pro a potential catalyst for the VR market, although its hefty $3,500 price tag may keep consumers at bay.

And Wedbush's Dan Ives sees the headset as a developer moat for Apple, forecasting a surge in apps and growing use cases in the coming years. Ives has maintained his outperform rating on Apple holding steady at a $205 price target. And guess what, Dan Ives, from the screen to the flesh. He's here with us in the studio. Didn't need any AR, VR for that, Dan.

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I'm going to ask you the question that Dan Howley talked about earlier, which is, what is it for? What do you use this thing for? And I think that's really, especially given the price, the question that people are asked.

DAN IVES: No doubt. And remember this first iteration, it's not consumers. It's essentially aimed at developers because there's a battle right now for developers in what we see in tech from Microsoft to Google, obviously, at Apple.

Look, I believe the use cases, the applications, it's going to be in the thousands in terms of how consumers could use this down the road-- gaming, health, fitness. And I think this is the start of what I view, almost call an iPhone moment in terms of where this is heading over the next five to seven years. And I think for Cupertino to bring this out now, it's the grand entrance.

BRAD SMITH: Where does the price have to come down to over the next five years if that's, kind of, the timeline that we're looking out to? Because near-term, this environment, we're already looking at consumers not just trading down, but they're fading some of their tech purchases.

DAN IVES: $1,500 in the next two years. That's, sort of, the price point where I see this ultimately going. But that's the DNA. That's the playbook of Cupertino. They're going to come out, expensive product developers, use cases increase, investors skeptical like they always are, and then ultimately, two, three years down the road, you'll get prices that are halved with the applications and use cases that are in the thousands.

And that's-- look, that's how Apple right now is, again, on the verge of a $3 trillion market cap. They're playing chess. Others are playing checkers.

JULIE HYMAN: It doesn't sound like then that it's going to be a real revenue contributor for a long time.

DAN IVES: Yeah, in the near term, this is bread at the restaurant, an appetizer. And then there's like this from a revenue perspective, and you saw the knee-jerk reaction yesterday. But I think right now this is laying out a longer term strategy.

I think some of the parts-- when you think about what they're doing here, this is really the start of an AI ecosystem in the App Store that they're going to be building. And I think on some of the parts, $30 or $40 per share as you look down the road what this could add.

BRAD SMITH: Interesting. And so as we're thinking about the rest of the announcements that Apple had made over the course of yesterday, a lot of software updates, iOS, a lot of the MacBook updates, which much of that expected. But what does this also mean for some of the other tertiary players that are looking at Apple that are looking to drum up partnerships and make sure that they're part of the development of hardware or even on the software experience?

DAN IVES: Well, because for Apple, you want to be part of the ecosystem. And you look like with Disney, obviously, partnering, and you look at Unity obviously on the gaming side, and I think this is really the start of what's a revolution that's happened in tech. Developers are trying to pick their spot, Microsoft, Google, Apple.

And that's why yesterday Cook's talking not to me and you. He's talking to developers. And that's-- because there's a game of thrones, a street battle for developers right now in tech.

JULIE HYMAN: Your colleague Laura Martin over at Needham thinks Apple should buy Disney as a part of this whole growth push. What do you think?

DAN IVES: Look, and Laura has my respect a ton, I think it's one on paper it's always made sense. But realistically, Apple just doesn't do M&A. Beats biggest acquisition had done $3.4 billion, and I think that time has come and gone. I think there was a time Netflix, we've talked about where they could have bought them. But I think right now this is actually flexed muscles.

Apple right now is in more of a position of strength today than they were two or three years ago, and that's despite, obviously, a lot of bears coming out of the caves trying to think negative what's going to happen to Apple. And now we're sitting here again on $3 trillion mark cap verge.

JULIE HYMAN: Getting there. Getting there. $190 I think is the per share number that we're talking about. I want to pivot for a moment because you cover a lot of different stocks that we track very closely. C3.ai, Ben Axler of Spruce Point Capital was on our air yesterday. He's got a short case against the company. He was talking about it. And that company has been one of the most hyped AI companies, obviously.

My understanding is that it doesn't-- it's been around for a few years. Software pioneer Tom Siebel is the guy who founded it. It doesn't really do generative AI is my understanding. It's an AI company. There are a lot of AI companies out there. Is that the surge that we've seen in these shares justified?

DAN IVES: Look, we believe, and obviously, Spruce has done a ton of work as well as a lot of the bears. This is a battle right now in terms of bulls, bears. And can the execution story play out in C3? We believe it can, which is why we upgraded it. And we've been bullish, been bearish. And I think right now in terms of what's happening in AI, I think it's the biggest transformation that we've seen in tech in the last 30 years.

And when you look at Siebel, you look at C3, there's a huge opportunity for them. But now, and there's a big spotlight, they obviously have to execute step by step because obviously, a lot of negative views out there in that. I think that ultimately speaks what we're seeing in this environment, right?

Every time I have a bullish Tesla note, I get 30 or 40 emails I couldn't repeat on air in terms of some of the haters. So it just-- it speaks to-- it's a divisive time right now between the bulls and a lot of those bears that are now deep in the caves and hibernation mode.

BRAD SMITH: So what is the benchmark timeline for some of the major investments, especially given the thrust of either FOMO or people who just want to look at the AI space and get a snippet of it and get involved? What's the benchmark that they should be looking at? We're trying to get a sense of that from everyone who covers this space.

DAN IVES: Sure. I mean, the New York City cab driver knows Microsoft, Nvidia are obviously top of the mountain. But you look at second, third, and fourth derivatives, I think it's just starting today. In other words, now, look, going back to some of the worries out there, are they going to be fakes? Are they're going to be ones where there's hype and not real, no meat on the bones? Yeah, but I think overall, this is going to be a transformational trend across software, cybersecurity, big data.

You look at MongoDB, you look at names like Palantir, you look at names like now all of a sudden that are on the radar because they built moats and now you're starting to see the use cases. And it just comes down to anyone that talked hype wants Nvidia, and that's going to be known as guidance heard around the world.

When they came out with that, that's where any of the skeptics, the scheme that were skeptical of Tom Brady coming out of 2000 draft out of Michigan sixth round.

JULIE HYMAN: Well, speaking of skepticism, I want to circle back to Tesla for a minute because I get the other side of it, by the way. If I say anything critical of Tesla, I hear from the people who you don't hear from when you write the good notes. So there's a lot of, obviously, strong feelings about it on both sides.

But the stock has been steadily creeping up here this year. It still has not re-attained its highs, but it's seen some recent enthusiasm. And the question I always ask with Tesla is whether it's going to be able to deliver. Clearly, it has in the past. But as time goes on, it then has more and more to deliver on.

DAN IVES: Total. Look, I think essentially once the shareholder meeting down in Austin, I think when Musk laid out the vision, talked about finally starting to advertise, talked about maybe the view from a battery technology perspective, margins, and I think ultimately planted a flag. In other words, that's the one where it's OK, here's what we need to do for the year, and this ultimately is what we need to execute on.

Look, in my opinion, Tesla's a name where just like my view on Apple, or Amazon, or Google over years. If you look at over a one to two-quarter period, you miss transformation what's happened. I think the price cuts were the smart move. They essentially put an iron fence around their install base.

Now, this next quarter coming up, and we'll get obviously orders first week in July in terms of units, you need to deliver in China. And I think that ultimately, the biggest, I think, debate right now from the bears, it's China. Can, in a price war, they ultimately navigate that? That's what Musk and Tesla need to know, and we believe they can.