Back in 2014, Apple (NASDAQ:AAPL) CEO Tim Cook approved an ambitious project to make an Apple-branded, self-driving car that would take on Tesla (NASDAQ:TSLA). The project, codenamed “Titan,” has been moving in fits and starts since 2014, with it ultimately producing nothing tangible for consumers to see and having zero to minimal impact on Apple’s stock price.
Until 2020.
Apple stock has been rising in recent days on reports that Apple is moving forward with project Titan, and targeting to produce a self-driving electric vehicle by 2024.
That’s big news.
The rumored Apple car has enormous potential. Apple has the technology know-how, the resources, the talent, and the brand equity to create an electric, self-driving car that is as good as it gets in the market.
Will it happen? Still to be determined.
But, even if the Apple car does never come to life, the fact that the company continues to innovatively push forward and develop new technologies is a big win for AAPL stock.
Here’s why.
The Apple Car Could Be Huge
The Apple car — although still little more than an intangible concept to anyone not working on project Titan — has tremendous long-term potential.
That’s because Apple has all the necessary ingredients to build a top-notch electric, self-driving car with robust consumer demand.
Apple has the technology expertise to build smart hardware. After all, this is the same company that makes the iPhone, the iPad, the Apple Watch, the Apple TV, etc. When it comes to making smart devices, Apple has no parallel.
Apple also has the talent (when you’re the largest tech company in the world, you naturally attract some of the top tech engineers in the world) and resources (the company has almost $200 billion in cash on the balance sheet) to invest in turning its core hardware technology, into a scalable platform for a self-driving car.
Plus, the company’s expertise in batteries, cameras, sensors, and displays will help Apple create a very cool car. That car will also sync seamlessly into the already robust Apple software ecosystem, creating huge synergies for consumers as a plug-and-play device alongside their iPhones and Apple Watches.
And, perhaps above all else, Apple is Apple. People love Apple. There are a handful of folks out there who will buy anything and everything Apple. That brand equity is rivaled only by Tesla — and Tesla sells a lot of cars.
Net net, it’s no guarantee that Apple will bring Apple car to life by 2024, or ever. But, if the company does, it will be a huge success — and Apple selling a lot of Apple cars in the back-half of the 2020s will be a huge upward catalyst for AAPL stock.
Apple Continues to Innovate
Even if the Apple car never becomes a tangible reality, news that Apple is working on self-driving technology is a big win for AAPL stock.
Why?
Because it shows that Apple is continuing to innovate.
One of the biggest knocks against Apple in the post-Steve Jobs era has been that the company has failed to innovate. After all, the company’s biggest sales driver — the iPhone — is more than a decade old.
Personally, I think such knocks are overblown. Apple has innovated aggressively and impressively on the software front, building out a suite of high-margin software services with annually recurring revenue streams to sell to its massive hardware install base. Big success on the software side of things has helped push AAPL stock higher over the past few years.
Admittedly, though, that is software innovation. Not hardware innovation. To unlock the next “leg up” in AAPL stock, the company likely needs some major hardware innovation.
Self-driving cars may be that hardware innovation. Or they may not be. Either way, the fact that Apple is pushing forward here strongly implies that this very capable, very strong company will one day stumble upon another game-changing hardware innovation.
That innovation will lay the foundation for another decade of growth in AAPL stock.
Bottom Line on AAPL Stock
Apple stock is a long-term winner. The Apple car will only add firepower to what is already a very healthy long-term growth narrative for the tech giant. And, in that sense, news that Apple car development continues to hum along is simply another reason to buy and hold AAPL stock for the long haul.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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