How Apple Project Titan Could Jump-Start AAPL Stock

AAPL StockWhat is Apple Project Titan? 

Hype can be a powerful tool for a business, and few have mastered its use like Apple Inc. (NASDAQ:AAPL). With a long history of building intense borderline-mania surrounding new products, Apple has used that strategy time and again to ensure that it dominates whatever field it’s operating in, whether it was the MP3 player, the smartphone, or the tablet. “Apple Project Titan” is proving to be no exception.

The Apple autonomous car, currently in development as “Project Titan,” is shrouded in mystery. While some believe that the tech giant is actually looking to produce its own autonomous vehicles, others are convinced that the company is instead focused on producing software for self-driving cars.

Either way, this Apple car project is one of the most exciting and innovative moves to come out of Apple in a while.

Sure, AAPL stock is soaring, but think about the company over the past few years. What was the last truly innovative product that Apple shipped that set the world ablaze in a storm of adulation? The “Apple Watch” certainly didn’t live up to expectations. The most recent iterations of the “iPhone” have fallen flat, with most new features being noted for their failings rather than benefits (we’re looking at you, non-existent headphone jack and wireless “AirPods”).

This is what makes Apple’s Project Titan so exciting for investors.

Whatever it is, it promises to be something new. And when Apple dabbles in something new, there’s a good chance that AAPL stock investors will see some big returns.

The ultimate question is what exactly an Apple autonomous car means. Does it mean the whole—from axle to tailpipe—vehicle, or simply the software needed to power a self-driving car? Some analysts are convinced that Apple would love to build the car from the ground up, which makes sense. Apple has had a ton of past success building products entirely in-house, allowing the company to establish a brand with nearly unparalleled appeal in some parts of the world.

Bringing that type of meticulous dedication to creating a car would naturally be enticing to Apple executives. The problem is that building a car is a little trickier than building a smartphone. (Source: “Apple ‘almost certainly’ exploring making a whole car but there’s a big challenge, top analyst says,” CNBC, April 18, 2017.)

Apple Self-Driving Car 

When it comes down to it, you have a multitude of factors that make car production difficult to not only begin, but also scale up. Of course, Apple does have a tonne of cash on hand that it could use to kick-start its ambition (or use for acquisition purposes).

And there are models for this type of ground-up vehicle creation. Just look at Tesla Inc (NASDAQ:TSLA). That company just surpassed the market share of some of the biggest car producers on earth, and it did not have nearly the amount of resources and cash on hand when it started that Apple has now.

So while it would be difficult for Apple to build a car from the ground up, it is by no means impossible.

The more important question for investors—and one that Apple is certainly asking itself—is whether there is more profit in autonomous car software development or in the creation of an Apple car.

Without getting too deep into the weeds with speculations on an Apple car price and other specifics along those lines, there are definitely a number of competitive obstacles that would make an Apple entry into car production difficult. Or at least, it would take a few years for the car production to become a strong contributor to Apple stock.

First, the aforementioned Tesla is an up-and-comer in the car tech market. It has already generated a brand and has much of the same “cool” factor that propelled Apple products to such unparalleled success. Trying to beat out Tesla would be difficult for a number of reasons, not least of which is the multi-year head-start that Elon Musk’s company has on Apple.

Apple vs Tesla chart

Chart courtesy of StockCharts.com

An Apple-branded car could propel itself beyond Tesla in the long run, but it would be a difficult feat, and one that would require patience from Apple shareholders.

And what would this car feature that would set it apart from competitors?

Apple CEO Tim Cook has refrained from commenting directly on Apple Project Titan, but he did make a few broad statements about vehicles in general that may provide us with some hints as to what an Apple car project may look like.

“When I look at the automobile, what I see is that software becomes an increasingly important part of the car of the future,” Tim Cook said of cars of the future in October at the WSJD Conference in October 2015. (Source: “Apple CEO Tim Cook Talks Music, iPhone Innovation and More at WSJDLive 2015 — Live Blog,” The Wall Street Journal, October 19, 2015.)

“If you listed out the 10 top things you love about the car, [the interface] would probably not be on the top 10 list.”

These statements were made quite a long time ago, so again, the rumors that Apple has since abandoned the creation of a car in favor of software development may very well hold. And again, these were points made about cars in general, so by no means were they a stated confirmation of an Apple car being developed, though there seems to be some tacit recognition of the project in these comments.

Another spoke in the wheel of the Apple car is that several car manufacturers like Bayerische Motoren Werke AG (BMW) and Daimler AG (Mercedes-Benz) reportedly refused to partner with the company in developing its vehicles. (Source: “Here’s everything we know about Apple’s secretive car project,” Business Insider, August 14, 2016.)

And tensions between Tesla and Apple have gotten pretty heated in some of their exchanges. Take this burn via Elon Musk:

“We always jokingly call Apple the ‘Tesla Graveyard.’ If you don’t make it at Tesla, you go work at Apple. I’m not kidding,” he said in an interview with the BBC. (Source: “Tesla chief Elon Musk says Apple is making an electric car,” BBC, January 11, 2016.)

And the fight between the Apple autonomous car and Tesla has also spilled over into recruiting wars.

Chris Lattner, a famed Apple programmer known for creating the programming language “Swift,” ended up jumping ship to Tesla, where he was brought on to be the vice president of autopilot software. The move was seen as a fairly big coup for Tesla, grabbing one of the most well-respected coders around. (Source: “Tesla hires Apple’s creator of Swift as new VP of Autopilot Software,TechCrunch, January 10, 2017.)

The company also has a reported 1,000-plus engineers working on the project, dedicating considerable manpower to whatever Apple Project Titan turns out to be.

So whatever Apple Project Titan ends up manifesting itself as, there will be considerable competition.

That’s even without mentioning similar projects like Google’s car project “Waymo.” The road to success is long for an Apple car, though not impossible.

Apple Car 2019

We’ve raised a lot of questions here, but with the Apple car project being kept under wraps for the time being, we can’t quite be sure about when it will be hitting markets.

Reports initially put the release as early as a couple years, so we could see an Apple car in 2019.

But more recent news has put the release somewhere in 2020s, and likely in 2021.

In any case, there are a lot of question marks surrounding Apple’s Project Titan, but that doesn’t mean that the product doesn’t have the potential to be a radical boon to Apple stock.

AAPL Stock Projection 

The real impact of an Apple autonomous car is a few years off for investors, but with a long-view projection of potentially having a huge impact on Apple stock. In the short term, what can an Apple investor expect to see in the more immediate future?

Frankly, there’s a lot going on.

Tim Cook has been hot on augmented reality in recent months.

“I regard it as a big idea like the smartphone,” he said of AR technology. “The smartphone is for everyone, we don’t have to think the iPhone is about a certain demographic, or country or vertical market: it’s for everyone. I think AR is that big, it’s huge.” (Source: “Apple CEO Tim Cook: As Brexit hangs over UK, ‘times are not really awful, there’s some great things happening’,” The Independent, February 10, 2017.)

“I get excited because of the things that could be done that could improve a lot of lives. And be entertaining. I view AR like I view the silicon here in my iPhone, it’s not a product per se, it’s a core technology. But there are things to discover before that technology is good enough for the mainstream,” he continued.

These are some big words from one of the biggest executives in the world. And by market trends, AR is looking more and more like one of the next major revolutionary tech crazes.

The “iPhone 8” is also looking to be one of the biggest models introduced in a long time. With countless rumors on everything from charging mechanisms to screens, there’s a lot of interest building around the next smartphone offering from Apple. Remember the hype machine I mentioned earlier? It’s out in full force for the next Apple iPhone, which could be huge for the company.

Of course, the company is not all roses. If you want to invest in Apple, there are a tonne of considerations. Its increasing debt, falling iPhone sales, weakening Mac sales, and stalled innovation could hinder the company’s progress.

But that’s why Apple Project Titan could be one of the biggest events to hit Apple in years.