In a note released Friday, Morgan Stanley analysts released a conservative prediction that Apple (NASDAQ:AAPL)'s Vision Pro VR headset could generate $4 billion in revenue by fiscal year (FY) 2027.
However, if it achieves a 1% penetration of the current iPhone user base within five years, revenues could soar to $40 billion, the analysts added.
“Topdown, we've previously sized Vision Pro as a $20-70B opportunity by 2030, but that forecast is a bit aged and we prefer to think about adoption of the Vision Pro compared to the Apple Watch or AirPods - i.e. peripheral devices,” analysts said.
If Vision Pro follows a similar adoption trajectory, the broker anticipates $8-15 billion in revenue over the next five years, equating to 2-4 million units sold annually.
This accounts for 0.2-0.3% of the global iPhone user base, reflecting Vision Pro's higher price and limited distribution, according to Morgan Stanley’s forecast.
A more optimistic scenario, where Vision Pro and its subsequent versions achieve a 1% growth in the iPhone user base (around 12 shipments) in five years, would “imply nearly $40B of revenue in 5 years, bigger than the iPad, Mac, and Wearables businesses today,” they added.
Morgan Stanley has recently revised their forecasts for Apple's Vision Pro upwards by 35-80% over the next three years. This adjustment stems from two key observations, including the better-than-expected supply of the device and an anticipated increase in the average selling price (ASP) due to the introduction of new storage options that became evident on the pre-order day.
“For FY24, we now model 350K units (up from 250K previously) and a ~$3,600 ASP, which translates to $1.3B of revenue and implies the Vision Pro represents 0.3% of total revenue in FY24, immaterial in the scheme of things,” the team said.