Apple Stock Prediction

The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First.

Summary:

• Adobe is working on releasing a full version of Photoshop for the iPad next year.
• This should help boost sales of Apple’s iPad and iPad Pro products. The iPad business is still a massive $4.74 billion/quarter for Apple.
• The introduction of iPad Pro has helped Apple remain the leader in tablet sales. Adobe making the iPad more useful is very important development.
• Aside from increased iPad hardware sales, Apple can profit from its 30%/15% cut from the $9.99/month subscription fee of Adobe Photoshop.
• The one-year algorithmic market trend forecast for AAPL is very bullish. This stock still deserves a buy.

My last buy endorsement for Apple (AAPL) was last May 14. AAPL has since shot up from less than $189 to more than $216. I am still going to rate AAPL as a buy. This stock has more upside potential. Aside from the imminent release of new iPhones, Mac Minis, and MacBooks this Q4, Apple also has a future tailwind from Adobe’s (ADBE) decision to release a full version of Photoshop for the iPad next year.

Going forward, Adobe’s move to upgrade its x86 software products to run on iOS and ARM-based processors outlines improved future iPad sales. Creative professionals who switched to the Surface Pro to run touchscreen-friendly Photoshop (and other Adobe software products) will likely buy the best and most expensive iPad Pro model after Adobe releases a full version of Photoshop for it.

(Source: Adobe/Apple)

Apple could sell 1 to 3 million more iPad Pros annually after Adobe releases a native iPad/iOS versions of Photoshop (and other legacy x86 Creative Cloud design software programs). At an average selling price of $900 (inclusive of the pricey Pencil and keyboard accessories), Apple is a facing a potential windfall of $2.7 billion in additional iPad sales starting next year. The iPad Pro models and the new 2017 and 2018 versions of the iPad helped Apple earn $4.74 billion in in FY Q3 2018.

(Source: Statista)

Adobe releasing more iPad/iOS versions of its subscription-only Creative Cloud software products can add new revenue for Apple via App store commission fees. Apple can charge a 30% cut from a $9.99/month Photoshop for iPad (15% cut after more than 1 year subscription). Apple’s revenue stream benefits if iPad users choose to subscribe via the iTunes app store.

The long-term implication of Adobe’s move is that other major software vendors like Autodesk (ADSK) may also offer subscription-based software products for the iPad. Sales of the iPad Pro can also get a boost once it gets full native iOS versions of AutoCAD, Revit, or SolidWorks. Engineers, Architects, draftsmen will join designers/creative professionals/content creators/photographers/vloggers in using the iPad Pro as their de facto productivity laptop.

There are 25 million creative professionals (and millions more of amateurs, students/social media content creators) who can easily afford a $900 iPad Pro. Adobe and Autodesk can find new customers for their software subscription business from the hundreds of millions of iPad users. Autodesk can certainly find iPad users willing to shell out $49.99/month for AutoCAD LT (2D drafting program).

The iPad Pro Keeps Getting Better

Apple’s ever-improving ARM/GPU design is only going to make the iPad Pro/iPad better for professional-level productivity. Adobe likely realized that last year’s 2017 iPad Pro already touts better multi-core Geekbench score than a 2016 MacBook Pro with an Intel Core i7 processor. Look at the chart below. Take note that the two 2017 iPad Pro models were only using the old A10X Fusion processor.

Should Apple decide to use the newer A11 Bionic SoC (System-on-Chi) on the iPad Pro, this iOS tablet can hit more than 10,600 in GeekBench 4 multi-core benchmark score. Photoshop, like other professional-grade software relies on multi-core processors to maximize performance. It is therefore important to note that Apple has continuously improved the multi-core CPU compute performance of its iPad Products.

Please refer to the chart below just how much Apple has boosted the iPad’s compute performance since the iPad Air. It has more than tripled in multi-core CPU power. Like it or not, Adobe cannot ignore the vast improvement of tablet computers. It is inevitable that Adobe has to grow outside of its x86 software comfort zone so it can find more subscribers. 

Photoshop Next Year, Other Adobe Software Products Will Follow

Adobe chose to work initially on creating a new Photoshop for the iOS platform because 90% of creative professionals use Photoshop. After working on Photoshop for the iPad, it makes sense for Adobe to start creating iPad versions for its other web/print design software products. Two or three years from now Illustrator, InDesign, Acrobat, Dreamweaver, and Animate CC for the iPad can become a reality.

Apple will find more buyers of the iPad Pro once it can be used in all aspects of creative production, not just photo editing/compositing via Photoshop. In my opinion, the vector design product of Adobe, Illustrator CC will be less demanding to an ARM-based processor than Photoshop. Adobe will make more money if it can create a full iOS iPad native version of the $19.99/month Illustrator CC.

Conclusion

Apple has long-term benefits from Adobe’s upcoming upgrade of its legacy x86 software products to run on the iPad. Apple gets more hardware sales and app store commission fees. I also dismiss the notion that Adobe’s move could affect future Mac sales. The thing is that iOS versions of Adobe products cannot be 1:1 replacements of macOS versions. Photoshop for iPad will only be a full image editing/compositing program that won’t have the video editing, 3D composition/editing, and animation features of the macOS version of Photoshop CC 2018.

My fearless forecast is that Apple’s stock can hit $250 after one year.  I Know First has a very bullish 12-month Apple stock prediction – 290.28. The 0.82 predictability score also denotes that I Know First’s neural network touts very high historical accuracy in its one-year stock market trend forecasts for Apple’s stock. We should put more trust in I Know First’s AI stock-picking ability.

Past I Know First Success with Apple Stock Prediction

I Know First has made accurate AAPL stock predictions in the past bullish forecast from August 22, 2017.

The article discussed possible acceleration of Apple’s research on Augmented Reality and self-driving car technologies as those are considered to be future diversification areas for Apple. Some key financial aspects were analyzed, including posting of a new record high of $162.51 at the end of August 2017. Finally, we expected that Apple coming up with a real major upgrade to the iPhone 7 could propel the stock to a new 52-week high. Since the forecast’s release, where the bullish signal of 131.7 was identified by the algorithm with predictability rate of 0.61, Apple Inc. stock price surged that high that on August 2, 2018 the company’s market capitalization became more than $1T and ended up on August 22, 2018 with stock price increase by 38.86%.

This bullish forecast for AAPL was sent to the current I Know First subscribers on August 22, 2017.

Please note-for trading decisions use the most recent forecast. Get today’s forecast and Top stock picks.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplification explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.