UBS Says Investors Should Buy Apple For This Reason

Financial services company UBS thinks Apple is a good buy. The firm reiterated its buy rating and believes the tech giant is a good buy because they are making a big bet on augmented reality.

Analyst Steven Milunovich wrote in a note to clients Tuesday, “According to some industry sources, the company may have over 1,000 engineers working on a project in Israel that could be related to AR [augmented reality].”

“Our work suggests that AR could be the next major innovation from Apple and that its competencies could make the company a winner … Augmented reality is an area where Apple could leapfrog competition in providing a superior user experience. This could result in sustained iPhone retention rates and more switchers.”

Augmented reality is a technology that “overlays digital content on the real world through the device’s camera view.”

Milunovich cited how Apple has purchased multiple AR technology companies like RealFace and PrimeSense. He also believes Apple could be releasing an early form of AR with the iPhone 8 this year.

“Apple appears more interested in AR [augmented reality], which connects people, than VR [virtual reality], which potentially isolates experiences,” he wrote. “Apple may be well equipped to lead given its core competencies in hardware design and software/hardware integration as well as its large base of affluent iPhone and iPad owners.”

Milunovich has raised his price on Apple from $138 to $151 and quoted CEO Tim Cook who said “I think AR is that big, it’s huge.”

Disclaimer: We have no position in Apple Inc. (NASDAQ: AAPL) and have not been compensated for this article.