Morgan Stanley said the news that Apple (AAPL.US) is canceling its electric vehicle project may increase the importance of fields such as generating artificial intelligence.
The Zhitong Finance App learned that Morgan Stanley said that the news that Apple (AAPL.US) is canceling its electric vehicle project may increase the importance of fields such as generating artificial intelligence. The bank gave Apple an “overweight” rating, and the latest price target was $220.
Analysts led by Erik Woodring said, “We believe that engineering talent, capital expenditure investments, and time spent on Project Titan (Apple's electric vehicle project code) can be better reused for related technology, such as generative artificial intelligence, which is much more likely to enter the market and strengthen Apple's competitive moat.”
“We believe any new talent that can help Apple further advance artificial intelligence is positive.”
The cancellation of the project also shows “relative cost discipline,” even though the electric car and autonomous vehicle market, valued at around $1 trillion, is probably one of the few areas where Apple can “drive” its $400 billion annual revenue.
It could also increase the company's operating leverage, given that Apple is reportedly spending $10 billion on the project each year. Analysts say Apple's gross margin has risen by about 230 basis points in the past three years, while operating profit margins have remained flat.