While investors may disagree over Apple‚Äôs (NASDAQ:AAPL) nearer-term movements, the longer-term view features much more consensus. Yes, the vaunted consumer-technology giant faces some serious questions, particularly regarding the era ‚Äúpeak smartphone.‚ÄĚ Yet, management‚Äôs constant push toward other sectors provides Apple stock with a second wind.
This is especially true when it comes to the $3.5 trillion healthcare industry. Thanks to the ever-rising merger between society and technology, it‚Äôs only logical that an organization like AAPL would seek opportunities in health and wellness. Specifically, the wearables revolution can offer an alternative revenue channel to support the heavily-saturated devices segment.
Among wearables rivals such as Garmin (NASDAQ:GRMN) and Fitbit (NYSE:FIT), the ultimate prize is the development of high-end biosensors. Current portable devices are able to track one‚Äôs footsteps, heart rate and even sleep patterns. However, taking this tech to the next level ‚ÄĒ such as non-invasive blood-sugar monitoring systems ‚ÄĒ represents the goldmine.
If Apple can get there first, the achievement could send AAPL stock skyrocketing. Morgan Stanley estimates that on the upper end, the company‚Äôs health division could rake in $313 billion by 2027. For context, Apple‚Äôs revenue last year was $266 billion.
Additionally, AAPL has built relationships with health insurers. Many of them are willing to pay for at least a portion of current-generation Apple Watches issued for their clientele. With future biosensor-armed products, this partnership will likely further bolster Apple stock.
Considering the company‚Äôs vast resources, it‚Äôs a tall order to beg against it. However, you should know three health-related headwinds before jumping onboard AAPL stock.
Most of us are familiar with Moore‚Äôs Law. Roughly paraphrasing, advancements in semiconductor performance will require exponentially larger financial investments. Eventually, you‚Äôll reach a point where a computer chip can‚Äôt get any smaller due to physical restraints.
A similar principle may impact wearable devices. If so, the case for Apple stock ‚ÄĒ at least as it relates to healthcare ‚ÄĒ may quickly collapse.
Right now, futurists are excited about the potential of biosensors. However, no one has come close to developing a consistent, accurate and non-invasive platform to measure critical health metrics.
Worse yet, such technology may be impossible to reach. Any device can measure ‚Äúexterior‚ÄĚ signals, such as a heartbeat. But blood-sugar levels for diabetics? That‚Äôs an internal, molecular dynamic that necessarily requires intrusion for measurement-taking purposes.
Please note that Intuitive Surgical‚Äôs (NASDAQ:ISRG) ultra-advanced da Vinci surgical system is minimally invasive, not non-invasive. Like I said, no one has cracked this key. If Apple does, AAPL stock goes to the moon. But that‚Äôs an aggressive bet.
AAPL‚Äôs management team recently boasted that they signed up 419,000 people to participate in a health study involving Apple Watch. To many observers, that‚Äôs a sign that most Americans trust Apple to handle their medical data with utmost care.
Admittedly, that‚Äôs a massive number, especially for a medical research study. However, I wouldn‚Äôt conflate that figure with overwhelming trust for AAPL.
As Facebook‚Äôs (NASDAQ:FB) various controversies demonstrated, Americans are rightfully sensitive about their privacy. And in this case, we‚Äôre just talking about inconsequential stuff. But when you broach the topic of personal health? The walls will come up faster than a presidential tweet.
That‚Äôs because disclosing health-related issues may lead to serious consequences. For instance, if you admit to having cancer, you‚Äôll have substantial difficulties getting life insurance. Thus, it really pays for Americans to keep their medical records on a strict, need-to-know basis.
So no, Apple stock won‚Äôt benefit from public trust.
Anyone can appreciate Morgan Stanley‚Äôs bullishness on Apple stock. Thanks to its large network of health insurance partnerships, the company can distribute future wearables on a grand scale.
At the same time, it would dilute Apple‚Äôs brand. After all, the company carefully cultivated an image of exclusivity, and its products‚Äô price points reflect it. However, mass distribution through health-related networks certainly contradicts decades of marketing.
Therefore, AAPL may find itself in a position winning one battle at the expense of another. In other words, there‚Äôs a reason why airport rentals don‚Äôt typically offer exotic sports cars from Ferrari (NYSE:RACE). You can‚Äôt lead in exclusivity and volume.
On a surface level, it‚Äôs easy to get excited over the burgeoning health opportunities. However, a closer look reveals that the case for AAPL stock isn‚Äôt quite so clear-cut.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.