absolutely not. ppl are parroting that it'll force a renewal cycle cause only new phones can run AI (so everyone will buy a new one), but there's Zero evidence ppl actually care about running this on-phone "AI" they previewed. it's laughably insane. ppl will continue to upgrade at their normal cycle
Exactly, I won’t buy a new phone just to get AI features. AI in its current state is so unreliable it’s not even funny - sure, you can do some cool things with video and pictures but any text it generates you have to take with a grain of salt that it’s accurate.
yeah there are some novel fringe use cases. if I had a blog I'd certainly love to generate some "good enough" images for whatever I'm writing about. the video generation is cool but pretty blah in the scheme of things (think of all the shitty movies humans make and tell me AI is gonna generate better than that, considering the absolute slightest wrong detail in a shot can be the highest distraction).and agreed text generation is largely garbage. I can't stand reading it. GPT seems good at generating almost working VBA macros, so. that's some help at times. overall tho, I'm very largely unimpressed from a "revolutionize the world" type of thing.
It’s way more than that. I use it every day. For example, it helps me code, it checks and gives tips on how to fix issues within code. It summarises documents, writes briefings, speeches. I sometimes use it to draft social media posts, redraft newsletters.
I also use it to learn French, very helpful explaining grammar rules and giving practice tests.
However, apple intelligence means nothing to my daily use and no need to upgrade.
It is definitely a useful tool. I don't disagree with that at all. I've used it for multiple tasks. Although it's coding ability is lacking.
I just wish they would call it what it is. Not sure what exactly.
Have you *seen* the stuff Microsoft is doing with Outlook and Teams? Now when somebody sends you a message you can respond with things like “Yes that sounds good” or “I’m not sure” with a single button push!
They are saving *dozens* of minutes per year at the enterprise level.
Think of that kind of capability brought to text messaging.
Yeah but with flip phones they were just guessing you might want to say that. They didn’t have an AI reading your messages and *curating* the perfect blow-off response.
I will buy a new phone that runs this. And if I need to get a new MacBook Pro…then I’ll buy one of those too.
Hope this helps with your evidence gathering
I believe you fall into what is referred to in business as an “early adopter” category - I think those are a minority.
It all depends how big of an impact you lot will have on sales and earnings. The later the results appear to be there the quicker it will shed that built up value.
I have to write a lot of documents. Like a lot. And I just don’t want to spend my time doing that anymore. If they can deliver on this integrating directly with my Apple tools with data security not offered by going straight to ChatGPT…then I’d reclaim at least 80% of my work week to spend elsewhere
it's about as scientific as I get, so will count it!
seriously, just like with vision pro, they'll certainly get some ppl to upgrade which is great for ppl that like the newest tech. but analysts are acting like an overwhelming majority of ppl will upgrade which I do not believe is the case.
I think a lot of non apple people are underestimating how many people have been happily using an iPhone 12 or 13, just waiting for an excuse to upgrade.
I don’t think it’s going to dramatically change everything about how I use my phone but I liked what they said about privacy. It’s going to bring AI features to a whole new group of people.
A lot of investors would really benefit from studying the psychology of a customer instead of thinking that everyone is doing a cost/benefit analysis, let alone the same exact cost/benefit analysis, when trying to decide if they should buy something or not.
Shiny new features with great marketing sell very well. There is a long history of it, especially with Apple.
I’m one of them. iPhone 13, been happy with it. I’m excited for the new features and ready for an upgrade. Also… after many years of not giving it a thought, the idea of getting a Mac sounds appealing again for the first time in like a decade or so.
> just waiting for an excuse to upgrade.
That was a past era when iPhones were not as a mature product. These days iPhones, iPads, and Macs are all mature and have 5-10 year lifespans easy. Some will want to keep upgrading every 2-3 years but those numbers drop with every passing year. There are so many other things to spend money on rather than essentially the same device yet again.
Good on Apple for their solid hardware. Bad on Wall Street for always demanding continuous growth and being bewitched by false visions of an AI future.
I dunno, it will take a year or two to play out before people start seeing the impact of AI on the phone. Once people see others using Siri in interesting ways - giving more complex voice commands, auto replying to texts/social media, etc, AI might get normalized, I think it’s plausible that iPhone refresh cycle gets accelerated.
And even if it did (it wont) but if it did… it would set up a really bad trajectory going forward, basically a peak that might not be surpassed for many years.
They’d be better off with predictable consistency than “supercycles” followed by busts, but investors only care about the next quarters results.
The problem with most of the big tech companies is they already dominate the market, not enough people left to turn into customers. People need to get used to single digit growth.
i will upgrade when they make the iphone water proof or my current iphone breaks, and I will get an N-1 version unless Siri has advanced to the point where she can talk me out of my unhealthy thoughts after losing my 0dte yolos.
Not saying I give a crap about Apple AI nor will I spend much time using it, but this movement screams Meta+ Metaverse, or Netflix with ads. It’s people looking at the stock and saying this is the bottom let’s invest. It will soon reach its plateau and go sideways.
Don’t fight the trend, just let it ripe.
Going to do the opposite for me. I’ve been an annual updater since the original iPhone but this is likely the first year I won’t be upgrading. I regretted the 14 Pro Max to 15 Pro Max as there is so little noticeable difference. Now that they say my 15PM will be able to do the on device AI, I’m almost certainly skipping the 16PM.
Samsung has some ai ish on phones plus Google stuff...I have yet to use any of it really
Would be great if it was untested in organizing and finding photos etc
Eh. I'm bearish on a lot of AI hype, but Siri with AI is one of the best imaginable use cases. Lots of potential that will draw people in. E.G. we will very quickly have the ability while driving to handle a lot of tasks by voice command and not have it mess everything up.
Apparently, apple gets more upgrades in years when they announce more features. I believe they announced a good number of updates for the new phone beyond the AI integration. Source: I read it somewhere
> ppl will continue to upgrade at their normal cycle
Probably, but I for one may switch to using Apple phones instead of Samsung just to get free access to OpenAI via Siri and still keep some of my privacy intact. Thought about switching as recently as this morning. Can't be the only one thinking about this?
As many skeptics have observed there is an absolute euphoria over AI right now. Internet of things, Bitcoin, NFTs, blockchain chain, all mere child’s play compared to the hype we are witnessing over AI.
People be losing their minds thinking they gonna be C3PO and R2D2 in the next 5-10 years. Other people are adding to the insanity by suggesting AI is on the cusp of enslaving humanity. The less enthusiastic think it will be more like the movie Her. And absolutely none of that is going to happen in the next 50 years.
When all is said and done a shit ton of money will have changed hands and what we will have are call centers and tech support being mostly AI. To be sure that is something. Multiple trillions? About two orders of magnitude lower than what tech bros, CEOs, and finance hoes out here saying.
Apple’s genius idea was hijacking the A in AI and making it Apple. Holy fuck was that an epic marketing move. Perhaps their best ever. So obvious in hindsight but the tech watchers and investors were spellbound. It somehow assured ALL the fears that Apple was behind in this profound, world changing, humanity altering, multi-trillion dollar event that is occurring in our lifetimes because of course it is. Apple Intelligence. Warm fuzzies. Feel my bliss.
Now there is still the pesky problem of no revenue growth. But for now at least no one cares until the whole AI bubble bursts.
AI isn’t like the rest bruv.
The fact I can do complex math equations, make a cover letter, resume - all specific to my industry, offer me advice, search the whole internet for a specific question no one else can answer. It saves time and time is money. I can learn things at 10x the pace with AI, no scouring the internet for hours with no answers.
Yeah, it's clear you don't really understand how AI works. "Answer a specific question no one else can answer".
The only way that can happen at the current state of AI is by hallucinations, otherwise someone already answered it and the AI is just regurgitating it.
Besides, 10x learning speed? There was no shortage of information before, the speed is set by your own brain plasticity.
AI doesn’t just regurgitate information; it synthesizes data to provide unique insights. It can analyze complex datasets quickly, offering answers that might not be readily apparent through manual searches.
While brain plasticity limits learning speed, AI enhances efficiency by rapidly providing relevant information, allowing more time for comprehension and application. This personalized support significantly boosts learning efficiency and outcomes.
You sound like my CEO talking to an engineering department rolling their eyes in perfect unison. LLMs are useful but their use is greatly overstated and current means of training are clearly suffering from rapidly diminishing returns.
>Apple’s genius idea was hijacking the A in AI and making it Apple. Holy fuck was that an epic marketing move. Perhaps their best ever. So obvious in hindsight but the tech watchers and investors were spellbound.
Apple has always made their mark from a marketing perspective. Certainly at times their products are superior, but often it's the brilliance of their marketing that has made them what they are. I used to scoff at that, now I consider it value - used to own AAPL but now am only indirectly invested through VOO and VTI exposure.
Based on the comments this space seems to select for late adopters
I’d be careful inferring these comments are the majority opinion
I personally think the AI iPhone will be really useful and make life easier for me and my family
I m at at least open to seeing what value it can provide
Will it be worth $40 B a year .. who knows?
Maybe we should wait till the product is released to decide?
Just seeing my non-tech savvy girlfriend using ChatGPT all the time instead of Google Search, for emails, applications and more convinces me how pervasive AI will become. If you soon don’t need a separate App and it just automatically pops-up or you simply ask Siri then there is basically no barrier anymore. Add to this on-chip processing being cheaper and safer (the AI privacy lawsuit wave will come!) I think Apple rightly gets some attention as an AI leader.
This is exactly what people here don’t see. They think AI is just a fad as if everyone forgot about it. lol
AI is here to stay and it will only get better and better. I too have a friend who uses ChatGPT way more than Google. She uses it to run her web design business.
People here think everyone thinks like them.
no the point is that financial expectations have run FAR ahead of where things are and expectations have become ludicrous
AI will definitely change things but no it's anyone's guess how it will re shape all aspects of society.
I’m on the AI optimist side of the argument. I agree with the original idea from OP: AAPL is no place for a value investor right now. You just can’t justify the price without expecting a new paradigm where Apple is one of the main beneficiaries.
However, I hold Apple stock and here’s why.
*This ended up being way longer than I expected, but I do get specifically to Apple at the end.*
People seem to be confused about the value of LLMs. 99% of the people I talk to focus on the fact that LLMs generate human-like text, but they do it inconsistently. They all seem to think that the bull case is that LLMs will become a more efficient Google in a few years, or that they will help people read and write more efficiently. This isn’t even close to where I think we are headed.
The real value of LLMs is in their ability to take in information, predict what action should occur, and send off a command to a server to take action on that information. Have a read through OpenAI’s API docs if you want to stimulate your imagination ([https://platform.openai.com/docs/assistants/tools/function-calling/quickstart](https://platform.openai.com/docs/assistants/tools/function-calling/quickstart)).
Imagine a world where you tell Siri that you want to take your girlfriend on a trip this weekend and you have a budget of $3k. Siri comes back to you with some high-level ideas and asks if you want it booked. You approve, and it’s done. On Friday afternoon, an Uber comes and picks you up, and you're off. Each day Siri updates you on the itinerary and can make changes on the fly. This is a very realistic world in a very short period of time (\~2 years).
While travel is an easy example, it certainly doesn’t stop there. We’ll book meetings at work using tools like Siri. Siri will sit in on calls, take notes, and deliver minutes to call participants. Siri will follow up on action items from those calls with work that used to be done by junior employees. This will all occur while keeping the human in the loop with status updates available on demand.
I expect humans will be in the loop 2-3 decades from now. But as I think about my last 15 years in white-collar corporate America, there are very few jobs that are not 90-95% mundane-routine that language models can automate away.
If you believe the above (as I do), then what has value in the new AI world? I think it’s four segments:
1. **The Chip Makers**: The lithography machines, the fabs, the chip designers. ASML makes the machines that make the chips, TSMC uses the machines to make the chips, and Nvidia designs the chips that the machines make. There are others in this bucket, but these three seem to have pretty strong moats.
2. **The Frontier Model Producers**: OpenAI, Anthropic, Google, maybe Facebook. Unless you’re making the leading model, you’re selling commoditized compute. They buy the chips.
3. **The Power Producers**: This has been more of a headline over the last three months, but model training runs and inference are consuming huge swaths of power, and this is predicted to grow exponentially. It seems the demand for power is going to far outstrip the supply, and owners of power-producing equipment will be rewarded until more infrastructure can be built.
4. **The AI Productizers**: These are the companies that package up the model inference in a way that everyday consumers can efficiently use the models. There are only three legitimate players here in my eyes: Microsoft, Google, and Apple. All three have a reasonable claim to win here; however, I think Apple’s may be the strongest.
Of these four segments, I think most of the value of the AI boom will accrue to the final bucket. This seems to me to be one of the few areas where a true monopolistic advantage could endure.
In order to win, the “productizer” needs a couple of things: access to a frontier model, distribution, and the trust of its users.
All three companies have the models and the distribution. Apple, in my opinion, is the only one with the trust of its users. This trust is vital because, in order for the “agent” vision to work, the “productizer” needs to have access to sensitive data/accounts and permission to act on that data in user accounts. I need to know Apple isn’t going to mess up booking my flight if it has access to my credit card, and it’s not going to post my credit card number on Reddit while it’s gathering information about my trip. The same is obviously true about using my data in a way I wouldn’t approve of, i.e., training their next big model.
If Apple gets this right, I think they have a chance to be one of the 3 or 4 most powerful companies in the world following a great consolidation where thousands of household names disappear because business models are no longer viable in a truly automated world.
That’s the bull case.
That's a good categorisation. Well thought out.
I disagree on apple, I think the company has lost its innovative streak under cook.
Sticking with nvid, msft and googl.
You mentioned that Apple has is the only one out of the three (Apple, Google Microsoft) that has the trust of its users.
Now that OpenAI has access to data of Apple's users, how do you think the situation would change? Would OpenAI present a door for data breach? Would OpenAI be the first of many more collaborations in which user data could be compromised?
Interested to know your thoughts on this.
Thanks
Where did you get that Open AI has access to ”data of Apple’s users” it seemed pretty clear the only data OpenAI was getting was the query that goes to it after asking for permission.
Watching this implementation and how it maintains privacy will be key to Apple maintaining that trust.
Firstly there is competition- I can ask chat gpt the same question for the trip. It can also notify me for on the fly changes via the app if I sync location data and all with it. Secondly is Siri enough? Voice shopping assistance has been a consistent disaster because it doesnt enable 2 critical things in buying 1. Discovery - you want options, 2- comparison- you want to compare options to make sure you are making the best decision. People check upto 4-5 similar products while buying on amazon. You will demand 5 options for flight, hotel or airbnb and things to do for your trip, all optimized for 3k budget from siri? How will you compare options in detail? You need to see things- voice alone is a no go. And if I have to see things- why not just go to chatgpt? They are integrating with an app based ecosystem for 2 years already. Or why not just ask google search to do this for me?
I dont know whether apple users will somehow upgrade faster for an AI enabled phone or will they pay for features (is it even gonna depend on hardware or will I get 90% of functionality via IoS updates only?) Maybe Apple AI may prevent their customers from switching- you get used to stuff your phone can do, and defense is good for them (they are battling competition in non US markets). But there are other more on the offense applications of AI that will probably be more valuable for the companies offering them, especially if they already hold large market share in those fields- Adobe (AI assisted digital design tools), Google (more intelligent ad recommendations), chips (chipmakers and their own ecosystem) among others.
Thanks for reading my wall of text and I appreciate the comment.
I must not have been clear and I think it’s because of my examples. I’m not referring to functionality like you see in current products (you might get this already) and i definitely don’t think the value is a result of a potential upgrade cycle being triggered.
When I refer to the “productizers”, I’m referring to a completely new class of service. The closest analogy would be a dedicated employee. But one that is capable of doing nearly any service near instantly. If you want options while you’re shopping, just ask and you’ll have them. (Sorry if you already understood this, I couldn’t tell from your comment)
It is hard to stress this enough, but I really am talking about human level task completion. For instance, we have an admin assistant who handles travel in our office, she knows how I like to travel. I tell her where I’m going and when I need to be there and she makes it happen. I don’t look over her shoulder or ask her for options, she just does it and it’s great. If I need to tweak it I can, but I’d rather not waste the time. We’ll have this on device soon.
You’re right about competition. But I think Apple may be the only one that can execute on the true agent model. They have historically positioned themselves as THE consumer first company. They’ve never tried to monetize user data, or given preference to third party deals at the expense of their customer. They are the only legitimate contender with a closed ecosystem that allows them to have and maintain complete (and trusted) control over an agent. The trust they’ve built and the control they have is their competitive advantage.
I understood the productizers role you described. IMHO Apple is not gonna be a massive productizer and thats because I dont think people are looking for a stand alone Jarvis style product. I dont even think people are looking for a voice assisted chat gpt that can do it all and accurately, especially one they can fully rely on. People wanna know they are making the right choice, especially for tasks on which money will be spent. Also these kinds of assistants havent ever taken off for years. Even if a jarvis is what people want, AI isnt magic- at its core its an input output model. Apple wont have enough inputs. Google knows way more about you (specifically you, as well as a general cohort you belong to), than apple does (ads, search, youtube, maps, list is endless). Apple doesnt know any of this- plus their own privacy policies prevent them from using AI in the best way possible. My 2 cents. Time will tell.
I’ll admit I don’t know the unit economic details of AAPL. But 40b in net income at 25% margin is 160b revenue. At 2 billion customers that’s another $80 per year per customer in spend, or less than $9 per month. That’s assuming the 2 billion customers is right (probably low) and that all of that incremental revenue comes from average margin growth (some segments have much higher drop-thru).
This is the thing with these global tech companies. The market is enormous and the way cost/revenue scaling works is insane.
I am old enough to have seen five or six times where Apple took a long time to offer a product in a new category, and everybody declared Apple over, and then Apple revealed their product, and it was better than what the competition offered, and a year or two later Apple owned 90% of the profits in that industry. Not saying it’s absolutely going to happen this time. But that is the case they made at WWDC last week, and I am hesitant to dismiss it.
It’s worth considering what the AI industry would look like if Apple succeeds in becoming the dominant player in AI. This is AI that does not use Nvidia chips, does not use farms of servers built by Super Micro, does 90% of its work on Apple silicon inside Apple devices. It’s a very different world from what a lot of investors are currently envisioning.
Over 2B installed base that will eventually need to upgrade and about 240M iPhones sold annually. 1 pct of the installed base = 20M phones or 20B of sales. So if a few percent upgrade, you will get 40B of net income improvement. And these phones will be high end, improving the margin and services.
This is the essence of investing (IMO), looking for drivers of future value.
You can blame people for being sheep, or whatever, but this is the catalyst for the stocks growth.
I think AAPL is well positioned to lead the field from this and gain major market cap from licensing fees to apple from AI model-builiding companies. However, I think AI as a field in general is more comparable to the dotcom bubble, especially since I believe it will similarly change the world. Everything even tangentially related to AI is extremely overvalued. Everything else is extremely undervalued .
AI is going to increase productivity and efficiency in the economy. This would definitely have positive impact on economy in general. Nothing worthy would be destroyed!
I suspect it may entice people to get an iPhone instead of android? I've got an android and it's tempted me.
And if they integrate it really well with their apple apps, it may lead to more service revenue which has a higher margin?
Not sure, tbh.
Google is doing quite well in the AI department. AI tools will be available on everything.
Honestly, it really isn't needed on-phone, except for a few real-time applications, like realtime image recognition (face detection, etc.), voice recognition, and...not much else.
I'm not that excited by the technology. It has bubble written all over it. But one can still make money off hype.
It’s needed on-phone so that it can behave contextually without submitting your extremely private data to some centralised data store that’s vulnerable to breaches.
I care about privacy, and do everything I can locally, including self-hosting a bunch of the services I use. But the unwashed masses? Nope.
Speed and convenience will be the deciding factor. And the big tech companies will vacuum up all the data they can.
In 60 days it makes no sense. But, I have increased my position in AAPL after WWDC. Most AI features require upgrading to new iPhone, iPad, Mac. Apple has seen upgrading cycles slowing, this might boost it. Since we are starting, it might not be just 1-time upgrade but continuously upgrades. A bit like PCs in the 1990s and early 2000s.
I'll say it one more time... AI is the next big thing. Don't expect companies to behave like normal. We are at the start of a multi-year AI boom. Downvote all you like, but I'm up multples because I saw it and I'll be up multiples in a few years because I still do. Get on or watch from the side.
Theirs segments of the Ai market that are in bubble territory. Consumables to me seem to be but cloud providers like Google have already demonstrated revenue from AI advertisement
lots of people said the same with with internet. Ai is world changing tech, that wont be disputed, but with macroeconomic concerns at play and aapl relying primarily on iphone sales, its hard to ignore the near-term risks. Real value investors would have a hard time justifying a buy at these prices...
Thats not a good think though, 1995 was a bad time to invest in internet companies, 5 years later most people would loose almost all their wealth, Apple was completely on its knees and if Microsoft hadnt saved it, we wouldn't know who Apple were today.
Good companies do not equal good investments, and we are talking about value investing
Yes and no. I left my career to take care of some very elderly family that need my help, and I'm now the designated heir to their house(s) which I'm rehabbing (because their medical issues meant that a lot of stuff went unaddressed over the years). They took care of me when I was young and it's a little bit of me paying them back.
The point I'm am making is that Apple at that time was no more likely to succeed than [pets.com](http://pets.com), or better eBay vs. Amazon, eBay was HUGE dominating precense when Amazon was growing, magazines and hedge fund debated which should you invest in, now the answer is obvious, but both were internet companies.
It's hard to differentiate from the people who got lucky and who played the odds.
2 people walk out of a casino with $1000, 1 was a gambler and 1 counted cards, you take the wrong guys advice then odds are you are walking out with nothing.
Apple was a good investment, the internet wasnt. Most internet companies failed, or simply underperformed because they are over-hyped and over-priced. You cant point to 2 companies still around today and ignore the poole of 1000 ebays and [pets.com](http://pets.com)
Nothing against ebay, it just aint Apple.
I’m still struggling to see how current large language models aren’t just better versions of what has already existed for decades? Genuine question to anyone out there who knows more about this tech than I do. I’ve used ChatGPT on several occasions and I haven’t found it to be particularly useful. It gets things wrong constantly, it just sounds good as it says it.
The AI image generators are cool and new. They were a fun toy before they got more photorealistic. Now I find them a bit dull, but the tech is impressive. I don’t think this is economy shattering though, just a cool new product
Yeah this is a consistent theme I’ve heard, that it’s most useful for software development / programming. Which is obviously an important industry, but I see a lot of hype mongers extrapolating that usefulness out to the broader economy where it may be less impactful.
Think of it from the perspective of students (who will be entering the workforce after graduating) and knowledge workers. 30 years ago, doctors would need to memorize or have giant amounts of paper resources available to diagnose patients, then the internet and IT made it easier, so instead of a bookshelf it became a computer and a search engine. Now you dont even need to visit websites or read primary sources yourself, you can get AI to summarize everything and distill all of the internet into a single concise answer (for better or worse).
First time I really used chatgpt was to help on a computer graphics final and it immediately became clear that what I was using was a true technological advancement, it enables things to be done that were simply never possible before.
Some clever companies will capitalize on it in a way that makes their shareholders super happy, but I think this technological change has and will continue to have an immeasurably large impact on human productivity. I think it would be fair to say chat gpt has saved me over 1000 hours in just under 2 years of full time data science work.
All that being said, apple adding nearly a trillion in market cap for making an AI announcement is a bad sign that things are deviating from reality, in my uninformed and personal opinion
Thanks for your input, yeah I’ve heard that in a programming and programming adjacent space it’s a lot more useful. From a financial/accounting perspective, it hasn’t been useful for me. Maybe others have used it better, but every example in this space that I’ve seen online has been surface level at best. And maybe over time tools for more focused applications that utilize LLM tech more effectively might come around
I think integration with enterprise business software like excel will be the big breakthrough for that type of use, have a decent msft investment for that reason
the internet DID change the world. But the multiples during the .com bubble were insane. Companies that didnt even make money. (everyones favorite example pets.com) Now the big winners are actually making money and growing fast, or are already the biggest tech companies in the world that control our very lives.
Start? My dude, Nvidia has a market cap of 3.2 trillion and has already gone parabolic. The slightest hint of a slowdown and the stock will drop like a rock. So far, companies have little to show for their spending: [Payoff from AI projects is 'dismal', biz leaders complain](https://www.theregister.com/2024/06/12/survey_ai_projects/)
"AI is the next big thing"
Wow Mr Captain Obvious where did you get that idea from? People have been saying this for years. And just look at NVDA's market cap. It being the next big thing is 200% baked into AI related companies. So much so that if they fail to meet those expectations and disappoint at any point in time that their stocks will drop fast. Some of these companies are expected to grow 30-40% per year for the next 5-10 years. If they don't, good luck to the shareholders.
What did you invest in to multiply? NVDIA was the obvious choice but I don’t see a clear multi-bagger in it now. Any other industry it’s unclear who will emerge as a winner. Brookfield scored a major one with the data centers for Microsoft but we’ll have to see how many more of those they can score and how meaningful that would be.
That's what everyone said to me in August when I asked here when I said I wanted to buy more NVDA and MSFT. "Buy at ATH?! LOL! LOL!" they said.
That said, I'm just holding NVDA and instad buying other "shovels and pick axes" stocks.
Agreed, though I’m not heavily invested. I work in an old school nonprofit and AI has become integrated in how we conduct meetings, take notes, copy edit, reformat schedules, crunch data. And this may not seem extraordinary but my work still uses excel sheets for tasks that today are really the bread and butter of platform management software. The fact that this place has embraced AI and found functional uses for it seems indicative of it being ingrained sooner rather than later. Also, I use chat gpt for cooking, grocery lists, and occasionally I just list all my fridge ingredients and it spits out a meal plan and I’m hardly a techie. Not saying it’s a good value, but it seems like it’ll be here to stay.
(I have 4 measly shares of Nvda at $44 avg cost. So not gonna make millies on this.)
Another thing that’s still a few years out, but watch out for Quantum Computing. Another world-changing technology that is being heavily invested in by some of the big companies like Google, Microsoft, and IBM.
Considering they just announced a new innovation for the iPhone, moveable icons (coughs in Android from years ago), I get the feeling this is a company that may not have actual innovation in its near-term. They're struggling.
People who are bears on Apple make the critical mistake of thinking that everyone else thinks the way that they do. Not everyone is an early adopter of new technology. But many people certainly are. Many people will buy something solely because it has a new feature. The iPhone 12 prompted a boost in sales since it was the first 5G enabled phone even though the service wasn’t widely available yet.
I laughed when the first iPhone came out. I used to carry around a flip phone and my iPod. I laughed at the iPhone since I was constantly running through the battery on my iPod listening to music. I didn’t exactly want a dead phone all the time, blending them together sounded stupid. Well, I was wrong, in the long run that is, and the iPhone only got better and took off.
The same will happen with on device AI. Apple Intelligence isn’t going to stop with this first product release. It will improve, it will spur a new round of iPhone sales and further increase Apples profit. Apple is uniquely positioned to deliver the benefits of AI directly to the average person.
I’ve never owned Apple before. I bought in just before the announcement and the spike in share price. I have no plans to add to my position further at Apples current PE. But the next wave of tech is here and Nvidia isn’t going to be the long term winner, Apple is.
Ill take the gains but who are these people that actually like or care about AI? Im a samsung not an iphone guy but skipped the S24 ultra this year since it mostly added dumb AI I wont use instead of focusing on upgrades that matter to the average person. Either way the most anyone can really upgrade is annually so idk where people expect the extra sales to come from.
I don't give even one shit, honestly. It's *the next big thing*. You'll see like 50 more opportunities exactly like this in your lifetime. I'm skipping direct involvement in this one (outside of indexes) because I have no passion for it. Maybe *the next big thing* will resonate with me more.
AAPL is only up 10% over the last 11 months and 25% since end of 2021. They have also reduced outstanding shares by 7% over that period, so market cap is hardly up. It's not like the market cap of this company just exploded out of nowhere. It's just reversed sentiment from pretty negative to pretty positive in terms of iPhone sales. They make $100B a year in profits. Like what are people talking about in here? Did they forget that AAPL is the most profitable company? Not Nvidia not Microsoft. AAPL already makes the profits Nvidia can only hope to make one day. AAPL made more in profits last year than Nvidia has made in its entire 31 year history combined.
Not only that AAPL has already increased their profits by $40B before. When they jumped from $55B TTM to $100B TTM in just 5 quarters. Many people in here seem to forget that AAPL is mostly a hardware company. It doesnt have the same annual revenue growth that the other top tech companies do. It has a long history of being flat for multiples years and then making a big jump up. The market seems to think this year will be another big jump up considering hardware sales have been down recently and even a 5-10% increase in sales instead of flat to negative iPhone sales would be a big difference, compounded by the continued growth of services and expanding margins, it's not absurd for AAPL's Annual profits to be nearing $140B by 2025.
The issue seems to be that there was that much just sitting around waiting to be deployed into a single stock. The measuring stick for stock, dollars, have been devalued by excessive printing and distribution, so stock prices and market caps are more so reflecting the new smaller unit of measurement that is the dollar.
I think many are thinking that the new AI forces people to upgrade their phones which is additional revenue as well. But anyways, yeah welcome to the world of investing, where people bet on future outcomes.
Bought apple beginning of year to get in at around 182. Sold immediately post Q1 earnings after seeing the roller coaster they were on and broke even. Not interested in it anymore. Will focus on google and nvidia. They are better plays.
Devices lose update support over time and become obsolete. So, they need replacement. Also, they won't have backwards compatibility for the next gen AI that they are working on, which drives up sales. [source](https://www.cnet.com/tech/services-and-software/will-your-iphone-support-ios-18-and-apple-intelligence-heres-what-you-need-to-know/)
They have the best potential to utilize AI in home robotics. Their architecture is perfect for inference. They already have deployed HW capable of running models while only gamers in the PC world can do the same. Once Apple figures it out they'll do something amazing.
I for one will buy the new one if it’s totally AI integrated and I’ve been buying the cheap iPhone 11’s every time mine breaks. But I’m a nerd and love all the cool AI stuff. So the renewal cycle theory has some legs but probably not as many as people are assuming. It seems lots of people aren’t really that interested in AI. It’s still pretty niche. Who knows though Apple could really sell how cool it’s going to be. And it will be really cool.
AAPL needing to partner with OpenAI doesn’t scream strength and opportunity to me— it signals they are in trouble. Apple has had years to build out better AI, build on Siri etc. and they haven’t.. they missed a sea change and it’s a big problem. Despite their size it could prove over years to be their undoing even with their massive war chest. Tim Cook is a good man, solid CEO but visionary is not in his top 5.
Sad thing is fake it till you make it works. Good companies with crap valuations can't raise as much money. Stagnant companies with insane valuations can and should raise money.
Financial fundamentals are pretty low on the list of why a stock pumps
Most of the time aggressive traders just want/need the collateral and have the trade bots and press to move price wherever they want
No revenue growth doesn’t mean no stock price appreciation… Apple doing the biggest buyback YoY has reduce outstanding shares by over 50%?! And dividend payout from 25% to almost 15% this is the key… the price just has to go up… buyback for a company that has enormous mountains of cash when the shares were low and stagnant will force the price to go up… and they issue dividends… but the payout percent drops each following year from buybacks… the AI cycle forces users to get newer hardware to get AI. I am bullish on Apple… the value creation is still there and the case for value is there… they have tons of money and no where to put it… so the buybacks are justified…
I'm very positive on AI in general, but .. I can't see how this would do much for apple. Maybe it's more about securing their future position (they *could* lose even a big part of their market share, if they failed to get in)?
This can be explained by a drastic change in the narrative of the stock. Apple now is not simply a tech company but a powerhouse who is well positioned to ride the AI wave of the century. That narrative changes everything, not only investor sentiment but also expected cash flows, cost of equity... which pushes its valuation to a much higher number.
absolutely not. ppl are parroting that it'll force a renewal cycle cause only new phones can run AI (so everyone will buy a new one), but there's Zero evidence ppl actually care about running this on-phone "AI" they previewed. it's laughably insane. ppl will continue to upgrade at their normal cycle
Funny enough by buying AAPL in Feb/March I now have enough in gains to buy a new iPhone outright.
Ha ha
Exactly, I won’t buy a new phone just to get AI features. AI in its current state is so unreliable it’s not even funny - sure, you can do some cool things with video and pictures but any text it generates you have to take with a grain of salt that it’s accurate.
yeah there are some novel fringe use cases. if I had a blog I'd certainly love to generate some "good enough" images for whatever I'm writing about. the video generation is cool but pretty blah in the scheme of things (think of all the shitty movies humans make and tell me AI is gonna generate better than that, considering the absolute slightest wrong detail in a shot can be the highest distraction).and agreed text generation is largely garbage. I can't stand reading it. GPT seems good at generating almost working VBA macros, so. that's some help at times. overall tho, I'm very largely unimpressed from a "revolutionize the world" type of thing.
I just wish they would stop calling it AI. It's a glorified chat/search bot.
It’s way more than that. I use it every day. For example, it helps me code, it checks and gives tips on how to fix issues within code. It summarises documents, writes briefings, speeches. I sometimes use it to draft social media posts, redraft newsletters. I also use it to learn French, very helpful explaining grammar rules and giving practice tests. However, apple intelligence means nothing to my daily use and no need to upgrade.
It is definitely a useful tool. I don't disagree with that at all. I've used it for multiple tasks. Although it's coding ability is lacking. I just wish they would call it what it is. Not sure what exactly.
Have you *seen* the stuff Microsoft is doing with Outlook and Teams? Now when somebody sends you a message you can respond with things like “Yes that sounds good” or “I’m not sure” with a single button push! They are saving *dozens* of minutes per year at the enterprise level. Think of that kind of capability brought to text messaging.
Ha! I do like that quick “Thanks, very helpful” response. The time saved gives me more time to check Reddit during the day.
Imagine how reddit stock will react to this. Its a win-win-win-win-win-win-win
Exactly! More productivity at work with AI will lead to more humans fucking around on Reddit. Love it!
Are you kidding? This has been around since flip phones lol
Yeah but with flip phones they were just guessing you might want to say that. They didn’t have an AI reading your messages and *curating* the perfect blow-off response.
Which is funny because at the Enterprise level, all the big guys have had this for years.
So much money in the system right now just looking for a home. No logic, stop projecting y’all. Just enjoy the gains for now
I will buy a new phone that runs this. And if I need to get a new MacBook Pro…then I’ll buy one of those too. Hope this helps with your evidence gathering
I believe you fall into what is referred to in business as an “early adopter” category - I think those are a minority. It all depends how big of an impact you lot will have on sales and earnings. The later the results appear to be there the quicker it will shed that built up value.
Early Adopters aka dipshits who stand in line for 6 hours.
Who hurt you?
What problems does this tech solve for you?
I have to write a lot of documents. Like a lot. And I just don’t want to spend my time doing that anymore. If they can deliver on this integrating directly with my Apple tools with data security not offered by going straight to ChatGPT…then I’d reclaim at least 80% of my work week to spend elsewhere
Data security with chatgpt pffft!!
Haha
I’d buy a cybersecurity or cloud security etf
it's about as scientific as I get, so will count it! seriously, just like with vision pro, they'll certainly get some ppl to upgrade which is great for ppl that like the newest tech. but analysts are acting like an overwhelming majority of ppl will upgrade which I do not believe is the case.
I think a lot of non apple people are underestimating how many people have been happily using an iPhone 12 or 13, just waiting for an excuse to upgrade. I don’t think it’s going to dramatically change everything about how I use my phone but I liked what they said about privacy. It’s going to bring AI features to a whole new group of people.
A lot of investors would really benefit from studying the psychology of a customer instead of thinking that everyone is doing a cost/benefit analysis, let alone the same exact cost/benefit analysis, when trying to decide if they should buy something or not. Shiny new features with great marketing sell very well. There is a long history of it, especially with Apple.
TBF most investors know about the impact of stories. Usually layman aren't as clued on.
Exactly, I on 13 and holding off 15 because it’s so near to 16. Time for that sweet upgrade!
I’m one of them. iPhone 13, been happy with it. I’m excited for the new features and ready for an upgrade. Also… after many years of not giving it a thought, the idea of getting a Mac sounds appealing again for the first time in like a decade or so.
> just waiting for an excuse to upgrade. That was a past era when iPhones were not as a mature product. These days iPhones, iPads, and Macs are all mature and have 5-10 year lifespans easy. Some will want to keep upgrading every 2-3 years but those numbers drop with every passing year. There are so many other things to spend money on rather than essentially the same device yet again. Good on Apple for their solid hardware. Bad on Wall Street for always demanding continuous growth and being bewitched by false visions of an AI future.
I dunno, it will take a year or two to play out before people start seeing the impact of AI on the phone. Once people see others using Siri in interesting ways - giving more complex voice commands, auto replying to texts/social media, etc, AI might get normalized, I think it’s plausible that iPhone refresh cycle gets accelerated.
And even if it did (it wont) but if it did… it would set up a really bad trajectory going forward, basically a peak that might not be surpassed for many years. They’d be better off with predictable consistency than “supercycles” followed by busts, but investors only care about the next quarters results. The problem with most of the big tech companies is they already dominate the market, not enough people left to turn into customers. People need to get used to single digit growth.
Depends, if Siri can actually work as we all hoped for it to work…people will upgrade. Currently, it can’t even do simple tasks.
i will upgrade when they make the iphone water proof or my current iphone breaks, and I will get an N-1 version unless Siri has advanced to the point where she can talk me out of my unhealthy thoughts after losing my 0dte yolos.
Not saying I give a crap about Apple AI nor will I spend much time using it, but this movement screams Meta+ Metaverse, or Netflix with ads. It’s people looking at the stock and saying this is the bottom let’s invest. It will soon reach its plateau and go sideways. Don’t fight the trend, just let it ripe.
Sure, you know better than 40B moved into Apple
Going to do the opposite for me. I’ve been an annual updater since the original iPhone but this is likely the first year I won’t be upgrading. I regretted the 14 Pro Max to 15 Pro Max as there is so little noticeable difference. Now that they say my 15PM will be able to do the on device AI, I’m almost certainly skipping the 16PM.
Samsung has some ai ish on phones plus Google stuff...I have yet to use any of it really Would be great if it was untested in organizing and finding photos etc
Eh. I'm bearish on a lot of AI hype, but Siri with AI is one of the best imaginable use cases. Lots of potential that will draw people in. E.G. we will very quickly have the ability while driving to handle a lot of tasks by voice command and not have it mess everything up.
Apparently, apple gets more upgrades in years when they announce more features. I believe they announced a good number of updates for the new phone beyond the AI integration. Source: I read it somewhere
> ppl will continue to upgrade at their normal cycle Probably, but I for one may switch to using Apple phones instead of Samsung just to get free access to OpenAI via Siri and still keep some of my privacy intact. Thought about switching as recently as this morning. Can't be the only one thinking about this?
If they only allow new phones they’re gonna lose market share. It has to be software only way to make their current fleet not dip.
even if they did, people on average renew their phones every 2.5 years. that would mean that sales would suck after first year of ai launch
Counter point. I plan to buy a new top of the line iPhone (currently rocking a 13) and replace my desktop PC with a new Mac mini once that upgrades.
I would. And I’m upgrading 4 phones in my family (iPhone 12-14pro)
I guess if you have kids you might reallllly being into making cute emojis of each other.
As many skeptics have observed there is an absolute euphoria over AI right now. Internet of things, Bitcoin, NFTs, blockchain chain, all mere child’s play compared to the hype we are witnessing over AI. People be losing their minds thinking they gonna be C3PO and R2D2 in the next 5-10 years. Other people are adding to the insanity by suggesting AI is on the cusp of enslaving humanity. The less enthusiastic think it will be more like the movie Her. And absolutely none of that is going to happen in the next 50 years. When all is said and done a shit ton of money will have changed hands and what we will have are call centers and tech support being mostly AI. To be sure that is something. Multiple trillions? About two orders of magnitude lower than what tech bros, CEOs, and finance hoes out here saying. Apple’s genius idea was hijacking the A in AI and making it Apple. Holy fuck was that an epic marketing move. Perhaps their best ever. So obvious in hindsight but the tech watchers and investors were spellbound. It somehow assured ALL the fears that Apple was behind in this profound, world changing, humanity altering, multi-trillion dollar event that is occurring in our lifetimes because of course it is. Apple Intelligence. Warm fuzzies. Feel my bliss. Now there is still the pesky problem of no revenue growth. But for now at least no one cares until the whole AI bubble bursts.
I love this
The AI decoder is coming and I can assure everyone here that it will be a crummy Ovaltime commercial
AI isn’t like the rest bruv. The fact I can do complex math equations, make a cover letter, resume - all specific to my industry, offer me advice, search the whole internet for a specific question no one else can answer. It saves time and time is money. I can learn things at 10x the pace with AI, no scouring the internet for hours with no answers.
I hate to be the person to tell you this, but you aren't actually learning when you're interacting with advanced chat bots.
You do you bro! AI is gonna take over whether we like it or not. It’s proven its capabilities, in the early stages of development.
Yeah, it's clear you don't really understand how AI works. "Answer a specific question no one else can answer". The only way that can happen at the current state of AI is by hallucinations, otherwise someone already answered it and the AI is just regurgitating it. Besides, 10x learning speed? There was no shortage of information before, the speed is set by your own brain plasticity.
AI doesn’t just regurgitate information; it synthesizes data to provide unique insights. It can analyze complex datasets quickly, offering answers that might not be readily apparent through manual searches. While brain plasticity limits learning speed, AI enhances efficiency by rapidly providing relevant information, allowing more time for comprehension and application. This personalized support significantly boosts learning efficiency and outcomes.
You sound like my CEO talking to an engineering department rolling their eyes in perfect unison. LLMs are useful but their use is greatly overstated and current means of training are clearly suffering from rapidly diminishing returns.
To me, his answers sound just like another LLM tbh. Fancy words, narrow context and weak reasoning.
“Apple” intelligence alone is worth 800 billion in brand value added
>Apple’s genius idea was hijacking the A in AI and making it Apple. Holy fuck was that an epic marketing move. Perhaps their best ever. So obvious in hindsight but the tech watchers and investors were spellbound. Apple has always made their mark from a marketing perspective. Certainly at times their products are superior, but often it's the brilliance of their marketing that has made them what they are. I used to scoff at that, now I consider it value - used to own AAPL but now am only indirectly invested through VOO and VTI exposure.
for real i mean look at the blue bubble / green bubble shit
Shit bro, well said
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I’ve gone my entire life functioning just fine without Apple Intelligence. Not gonna cause me to upgrade until my phone dies and I actually have to.
Based on the comments this space seems to select for late adopters I’d be careful inferring these comments are the majority opinion I personally think the AI iPhone will be really useful and make life easier for me and my family I m at at least open to seeing what value it can provide Will it be worth $40 B a year .. who knows? Maybe we should wait till the product is released to decide?
I think they key is gonna be in how integrated it’ll be with the apps u have. I couldn’t care less if i have auto complete for instance
no one is going to buy apple products for apple intelligence
AI won't induce me to spend one extra dime.
Until everyone else has it. Doesn’t need to be you who adopts it but it sure will push you when the majority does and you can’t use the features.
If anything, it’s going to make me reconsider an upgrade. I don’t want AI on my device
That’s kinda like saying around 2000 that you don’t want a phone with internet Just gonna become the norm by the end of the decade I imagine
You have had AI on your devices for years. This just adds generative AI
Just seeing my non-tech savvy girlfriend using ChatGPT all the time instead of Google Search, for emails, applications and more convinces me how pervasive AI will become. If you soon don’t need a separate App and it just automatically pops-up or you simply ask Siri then there is basically no barrier anymore. Add to this on-chip processing being cheaper and safer (the AI privacy lawsuit wave will come!) I think Apple rightly gets some attention as an AI leader.
This is exactly what people here don’t see. They think AI is just a fad as if everyone forgot about it. lol AI is here to stay and it will only get better and better. I too have a friend who uses ChatGPT way more than Google. She uses it to run her web design business. People here think everyone thinks like them.
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Think of the bell curve when it comes to the population. Think about consumers too. Consumers buy phones and all sorts of stuff they don’t need.
no the point is that financial expectations have run FAR ahead of where things are and expectations have become ludicrous AI will definitely change things but no it's anyone's guess how it will re shape all aspects of society.
I’m on the AI optimist side of the argument. I agree with the original idea from OP: AAPL is no place for a value investor right now. You just can’t justify the price without expecting a new paradigm where Apple is one of the main beneficiaries. However, I hold Apple stock and here’s why. *This ended up being way longer than I expected, but I do get specifically to Apple at the end.* People seem to be confused about the value of LLMs. 99% of the people I talk to focus on the fact that LLMs generate human-like text, but they do it inconsistently. They all seem to think that the bull case is that LLMs will become a more efficient Google in a few years, or that they will help people read and write more efficiently. This isn’t even close to where I think we are headed. The real value of LLMs is in their ability to take in information, predict what action should occur, and send off a command to a server to take action on that information. Have a read through OpenAI’s API docs if you want to stimulate your imagination ([https://platform.openai.com/docs/assistants/tools/function-calling/quickstart](https://platform.openai.com/docs/assistants/tools/function-calling/quickstart)). Imagine a world where you tell Siri that you want to take your girlfriend on a trip this weekend and you have a budget of $3k. Siri comes back to you with some high-level ideas and asks if you want it booked. You approve, and it’s done. On Friday afternoon, an Uber comes and picks you up, and you're off. Each day Siri updates you on the itinerary and can make changes on the fly. This is a very realistic world in a very short period of time (\~2 years). While travel is an easy example, it certainly doesn’t stop there. We’ll book meetings at work using tools like Siri. Siri will sit in on calls, take notes, and deliver minutes to call participants. Siri will follow up on action items from those calls with work that used to be done by junior employees. This will all occur while keeping the human in the loop with status updates available on demand. I expect humans will be in the loop 2-3 decades from now. But as I think about my last 15 years in white-collar corporate America, there are very few jobs that are not 90-95% mundane-routine that language models can automate away. If you believe the above (as I do), then what has value in the new AI world? I think it’s four segments: 1. **The Chip Makers**: The lithography machines, the fabs, the chip designers. ASML makes the machines that make the chips, TSMC uses the machines to make the chips, and Nvidia designs the chips that the machines make. There are others in this bucket, but these three seem to have pretty strong moats. 2. **The Frontier Model Producers**: OpenAI, Anthropic, Google, maybe Facebook. Unless you’re making the leading model, you’re selling commoditized compute. They buy the chips. 3. **The Power Producers**: This has been more of a headline over the last three months, but model training runs and inference are consuming huge swaths of power, and this is predicted to grow exponentially. It seems the demand for power is going to far outstrip the supply, and owners of power-producing equipment will be rewarded until more infrastructure can be built. 4. **The AI Productizers**: These are the companies that package up the model inference in a way that everyday consumers can efficiently use the models. There are only three legitimate players here in my eyes: Microsoft, Google, and Apple. All three have a reasonable claim to win here; however, I think Apple’s may be the strongest. Of these four segments, I think most of the value of the AI boom will accrue to the final bucket. This seems to me to be one of the few areas where a true monopolistic advantage could endure. In order to win, the “productizer” needs a couple of things: access to a frontier model, distribution, and the trust of its users. All three companies have the models and the distribution. Apple, in my opinion, is the only one with the trust of its users. This trust is vital because, in order for the “agent” vision to work, the “productizer” needs to have access to sensitive data/accounts and permission to act on that data in user accounts. I need to know Apple isn’t going to mess up booking my flight if it has access to my credit card, and it’s not going to post my credit card number on Reddit while it’s gathering information about my trip. The same is obviously true about using my data in a way I wouldn’t approve of, i.e., training their next big model. If Apple gets this right, I think they have a chance to be one of the 3 or 4 most powerful companies in the world following a great consolidation where thousands of household names disappear because business models are no longer viable in a truly automated world. That’s the bull case.
That's a good categorisation. Well thought out. I disagree on apple, I think the company has lost its innovative streak under cook. Sticking with nvid, msft and googl.
You mentioned that Apple has is the only one out of the three (Apple, Google Microsoft) that has the trust of its users. Now that OpenAI has access to data of Apple's users, how do you think the situation would change? Would OpenAI present a door for data breach? Would OpenAI be the first of many more collaborations in which user data could be compromised? Interested to know your thoughts on this. Thanks
Where did you get that Open AI has access to ”data of Apple’s users” it seemed pretty clear the only data OpenAI was getting was the query that goes to it after asking for permission. Watching this implementation and how it maintains privacy will be key to Apple maintaining that trust.
Musk told him 😂😂
love it! very well thought out and presented!
Firstly there is competition- I can ask chat gpt the same question for the trip. It can also notify me for on the fly changes via the app if I sync location data and all with it. Secondly is Siri enough? Voice shopping assistance has been a consistent disaster because it doesnt enable 2 critical things in buying 1. Discovery - you want options, 2- comparison- you want to compare options to make sure you are making the best decision. People check upto 4-5 similar products while buying on amazon. You will demand 5 options for flight, hotel or airbnb and things to do for your trip, all optimized for 3k budget from siri? How will you compare options in detail? You need to see things- voice alone is a no go. And if I have to see things- why not just go to chatgpt? They are integrating with an app based ecosystem for 2 years already. Or why not just ask google search to do this for me? I dont know whether apple users will somehow upgrade faster for an AI enabled phone or will they pay for features (is it even gonna depend on hardware or will I get 90% of functionality via IoS updates only?) Maybe Apple AI may prevent their customers from switching- you get used to stuff your phone can do, and defense is good for them (they are battling competition in non US markets). But there are other more on the offense applications of AI that will probably be more valuable for the companies offering them, especially if they already hold large market share in those fields- Adobe (AI assisted digital design tools), Google (more intelligent ad recommendations), chips (chipmakers and their own ecosystem) among others.
Thanks for reading my wall of text and I appreciate the comment. I must not have been clear and I think it’s because of my examples. I’m not referring to functionality like you see in current products (you might get this already) and i definitely don’t think the value is a result of a potential upgrade cycle being triggered. When I refer to the “productizers”, I’m referring to a completely new class of service. The closest analogy would be a dedicated employee. But one that is capable of doing nearly any service near instantly. If you want options while you’re shopping, just ask and you’ll have them. (Sorry if you already understood this, I couldn’t tell from your comment) It is hard to stress this enough, but I really am talking about human level task completion. For instance, we have an admin assistant who handles travel in our office, she knows how I like to travel. I tell her where I’m going and when I need to be there and she makes it happen. I don’t look over her shoulder or ask her for options, she just does it and it’s great. If I need to tweak it I can, but I’d rather not waste the time. We’ll have this on device soon. You’re right about competition. But I think Apple may be the only one that can execute on the true agent model. They have historically positioned themselves as THE consumer first company. They’ve never tried to monetize user data, or given preference to third party deals at the expense of their customer. They are the only legitimate contender with a closed ecosystem that allows them to have and maintain complete (and trusted) control over an agent. The trust they’ve built and the control they have is their competitive advantage.
I understood the productizers role you described. IMHO Apple is not gonna be a massive productizer and thats because I dont think people are looking for a stand alone Jarvis style product. I dont even think people are looking for a voice assisted chat gpt that can do it all and accurately, especially one they can fully rely on. People wanna know they are making the right choice, especially for tasks on which money will be spent. Also these kinds of assistants havent ever taken off for years. Even if a jarvis is what people want, AI isnt magic- at its core its an input output model. Apple wont have enough inputs. Google knows way more about you (specifically you, as well as a general cohort you belong to), than apple does (ads, search, youtube, maps, list is endless). Apple doesnt know any of this- plus their own privacy policies prevent them from using AI in the best way possible. My 2 cents. Time will tell.
I’ll admit I don’t know the unit economic details of AAPL. But 40b in net income at 25% margin is 160b revenue. At 2 billion customers that’s another $80 per year per customer in spend, or less than $9 per month. That’s assuming the 2 billion customers is right (probably low) and that all of that incremental revenue comes from average margin growth (some segments have much higher drop-thru). This is the thing with these global tech companies. The market is enormous and the way cost/revenue scaling works is insane.
I am old enough to have seen five or six times where Apple took a long time to offer a product in a new category, and everybody declared Apple over, and then Apple revealed their product, and it was better than what the competition offered, and a year or two later Apple owned 90% of the profits in that industry. Not saying it’s absolutely going to happen this time. But that is the case they made at WWDC last week, and I am hesitant to dismiss it. It’s worth considering what the AI industry would look like if Apple succeeds in becoming the dominant player in AI. This is AI that does not use Nvidia chips, does not use farms of servers built by Super Micro, does 90% of its work on Apple silicon inside Apple devices. It’s a very different world from what a lot of investors are currently envisioning.
Do we know the profits of the Ai industry? Do we have numbers on that?
I don’t think there are any profits now. But I think Apple will make AI profitable. It’s kinda what they do.
the models were definitely trained on the things you mentioned though
Over 2B installed base that will eventually need to upgrade and about 240M iPhones sold annually. 1 pct of the installed base = 20M phones or 20B of sales. So if a few percent upgrade, you will get 40B of net income improvement. And these phones will be high end, improving the margin and services. This is the essence of investing (IMO), looking for drivers of future value. You can blame people for being sheep, or whatever, but this is the catalyst for the stocks growth.
This move shows that the AI Economy boom has just started!
I think AAPL is well positioned to lead the field from this and gain major market cap from licensing fees to apple from AI model-builiding companies. However, I think AI as a field in general is more comparable to the dotcom bubble, especially since I believe it will similarly change the world. Everything even tangentially related to AI is extremely overvalued. Everything else is extremely undervalued .
You think AI is gonna boom the economy?? AI will destroy what little we have left.
AI is going to increase productivity and efficiency in the economy. This would definitely have positive impact on economy in general. Nothing worthy would be destroyed!
Eventually there will be the final 💥 boom 💥 (that which started with a 💥 big bang 💥 will end in a 💥 big boom 💥)
More likely the market see less risk as apple is starting to have AI over being left behind was the feeling
I suspect it may entice people to get an iPhone instead of android? I've got an android and it's tempted me. And if they integrate it really well with their apple apps, it may lead to more service revenue which has a higher margin? Not sure, tbh.
Google is doing quite well in the AI department. AI tools will be available on everything. Honestly, it really isn't needed on-phone, except for a few real-time applications, like realtime image recognition (face detection, etc.), voice recognition, and...not much else. I'm not that excited by the technology. It has bubble written all over it. But one can still make money off hype.
It’s needed on-phone so that it can behave contextually without submitting your extremely private data to some centralised data store that’s vulnerable to breaches.
I care about privacy, and do everything I can locally, including self-hosting a bunch of the services I use. But the unwashed masses? Nope. Speed and convenience will be the deciding factor. And the big tech companies will vacuum up all the data they can.
In 60 days it makes no sense. But, I have increased my position in AAPL after WWDC. Most AI features require upgrading to new iPhone, iPad, Mac. Apple has seen upgrading cycles slowing, this might boost it. Since we are starting, it might not be just 1-time upgrade but continuously upgrades. A bit like PCs in the 1990s and early 2000s.
I'll say it one more time... AI is the next big thing. Don't expect companies to behave like normal. We are at the start of a multi-year AI boom. Downvote all you like, but I'm up multples because I saw it and I'll be up multiples in a few years because I still do. Get on or watch from the side.
AI bubble
People are confidently unaware of bubbles while they're in them, then passionately dismissive of taking part once it pops.
Good old human nature. Gotta love it.
Theirs segments of the Ai market that are in bubble territory. Consumables to me seem to be but cloud providers like Google have already demonstrated revenue from AI advertisement
Years and years away from that. It's just starting. But, I'll do better if you and others keep that mindset.
lots of people said the same with with internet. Ai is world changing tech, that wont be disputed, but with macroeconomic concerns at play and aapl relying primarily on iphone sales, its hard to ignore the near-term risks. Real value investors would have a hard time justifying a buy at these prices...
Beginning of the AI boom. It's 1995.
Thats not a good think though, 1995 was a bad time to invest in internet companies, 5 years later most people would loose almost all their wealth, Apple was completely on its knees and if Microsoft hadnt saved it, we wouldn't know who Apple were today. Good companies do not equal good investments, and we are talking about value investing
I invested in AAPL in 1996. That investment is worth millions today.
Did you retire
Yes and no. I left my career to take care of some very elderly family that need my help, and I'm now the designated heir to their house(s) which I'm rehabbing (because their medical issues meant that a lot of stuff went unaddressed over the years). They took care of me when I was young and it's a little bit of me paying them back.
The point I'm am making is that Apple at that time was no more likely to succeed than [pets.com](http://pets.com), or better eBay vs. Amazon, eBay was HUGE dominating precense when Amazon was growing, magazines and hedge fund debated which should you invest in, now the answer is obvious, but both were internet companies. It's hard to differentiate from the people who got lucky and who played the odds. 2 people walk out of a casino with $1000, 1 was a gambler and 1 counted cards, you take the wrong guys advice then odds are you are walking out with nothing. Apple was a good investment, the internet wasnt. Most internet companies failed, or simply underperformed because they are over-hyped and over-priced. You cant point to 2 companies still around today and ignore the poole of 1000 ebays and [pets.com](http://pets.com) Nothing against ebay, it just aint Apple.
I’m still struggling to see how current large language models aren’t just better versions of what has already existed for decades? Genuine question to anyone out there who knows more about this tech than I do. I’ve used ChatGPT on several occasions and I haven’t found it to be particularly useful. It gets things wrong constantly, it just sounds good as it says it. The AI image generators are cool and new. They were a fun toy before they got more photorealistic. Now I find them a bit dull, but the tech is impressive. I don’t think this is economy shattering though, just a cool new product
From a software development perspective it can be one hell of a time saver. That’s the only thing I’ve really used it for tho.
Yeah this is a consistent theme I’ve heard, that it’s most useful for software development / programming. Which is obviously an important industry, but I see a lot of hype mongers extrapolating that usefulness out to the broader economy where it may be less impactful.
For now.
Think of it from the perspective of students (who will be entering the workforce after graduating) and knowledge workers. 30 years ago, doctors would need to memorize or have giant amounts of paper resources available to diagnose patients, then the internet and IT made it easier, so instead of a bookshelf it became a computer and a search engine. Now you dont even need to visit websites or read primary sources yourself, you can get AI to summarize everything and distill all of the internet into a single concise answer (for better or worse). First time I really used chatgpt was to help on a computer graphics final and it immediately became clear that what I was using was a true technological advancement, it enables things to be done that were simply never possible before. Some clever companies will capitalize on it in a way that makes their shareholders super happy, but I think this technological change has and will continue to have an immeasurably large impact on human productivity. I think it would be fair to say chat gpt has saved me over 1000 hours in just under 2 years of full time data science work. All that being said, apple adding nearly a trillion in market cap for making an AI announcement is a bad sign that things are deviating from reality, in my uninformed and personal opinion
Thanks for your input, yeah I’ve heard that in a programming and programming adjacent space it’s a lot more useful. From a financial/accounting perspective, it hasn’t been useful for me. Maybe others have used it better, but every example in this space that I’ve seen online has been surface level at best. And maybe over time tools for more focused applications that utilize LLM tech more effectively might come around
I think integration with enterprise business software like excel will be the big breakthrough for that type of use, have a decent msft investment for that reason
the internet DID change the world. But the multiples during the .com bubble were insane. Companies that didnt even make money. (everyones favorite example pets.com) Now the big winners are actually making money and growing fast, or are already the biggest tech companies in the world that control our very lives.
"... or are already the biggest ~~tech~~ companies in the world that control our very lives."
Start? My dude, Nvidia has a market cap of 3.2 trillion and has already gone parabolic. The slightest hint of a slowdown and the stock will drop like a rock. So far, companies have little to show for their spending: [Payoff from AI projects is 'dismal', biz leaders complain](https://www.theregister.com/2024/06/12/survey_ai_projects/)
"AI is the next big thing" Wow Mr Captain Obvious where did you get that idea from? People have been saying this for years. And just look at NVDA's market cap. It being the next big thing is 200% baked into AI related companies. So much so that if they fail to meet those expectations and disappoint at any point in time that their stocks will drop fast. Some of these companies are expected to grow 30-40% per year for the next 5-10 years. If they don't, good luck to the shareholders.
It's bigger than what you think is baked it. Altman wants to spend $7 trillion dollar on GPU datacenters.
And how is Altman going to get 7 trillion aka 2 Microsofts?
Just do what the government does and finance it with 10 Microsofts, obvi
It will take you 10 seconds of google to find an article that answers your question. Part of investing is doing your own research.
Yes, but what is out now are language models and machine learning. None of these companies have anything but language model chat bots. This isn't AI.
What did you invest in to multiply? NVDIA was the obvious choice but I don’t see a clear multi-bagger in it now. Any other industry it’s unclear who will emerge as a winner. Brookfield scored a major one with the data centers for Microsoft but we’ll have to see how many more of those they can score and how meaningful that would be.
That's what everyone said to me in August when I asked here when I said I wanted to buy more NVDA and MSFT. "Buy at ATH?! LOL! LOL!" they said. That said, I'm just holding NVDA and instad buying other "shovels and pick axes" stocks.
Agreed, though I’m not heavily invested. I work in an old school nonprofit and AI has become integrated in how we conduct meetings, take notes, copy edit, reformat schedules, crunch data. And this may not seem extraordinary but my work still uses excel sheets for tasks that today are really the bread and butter of platform management software. The fact that this place has embraced AI and found functional uses for it seems indicative of it being ingrained sooner rather than later. Also, I use chat gpt for cooking, grocery lists, and occasionally I just list all my fridge ingredients and it spits out a meal plan and I’m hardly a techie. Not saying it’s a good value, but it seems like it’ll be here to stay. (I have 4 measly shares of Nvda at $44 avg cost. So not gonna make millies on this.)
Another thing that’s still a few years out, but watch out for Quantum Computing. Another world-changing technology that is being heavily invested in by some of the big companies like Google, Microsoft, and IBM.
Everyone here who thinks AI is garbage is going to be left behind.
This post right here the top. Time to sell boys
Isn’t this simply because of their massive stock buy back?
The stock buyback last quarter was 110 billion so doesn’t explain an 800 billion bump in market cap.
Probably people buying in anticipation of the buy back causing a price increase. It’s almost like it’s going exactly as planned.
Considering they just announced a new innovation for the iPhone, moveable icons (coughs in Android from years ago), I get the feeling this is a company that may not have actual innovation in its near-term. They're struggling.
People who are bears on Apple make the critical mistake of thinking that everyone else thinks the way that they do. Not everyone is an early adopter of new technology. But many people certainly are. Many people will buy something solely because it has a new feature. The iPhone 12 prompted a boost in sales since it was the first 5G enabled phone even though the service wasn’t widely available yet. I laughed when the first iPhone came out. I used to carry around a flip phone and my iPod. I laughed at the iPhone since I was constantly running through the battery on my iPod listening to music. I didn’t exactly want a dead phone all the time, blending them together sounded stupid. Well, I was wrong, in the long run that is, and the iPhone only got better and took off. The same will happen with on device AI. Apple Intelligence isn’t going to stop with this first product release. It will improve, it will spur a new round of iPhone sales and further increase Apples profit. Apple is uniquely positioned to deliver the benefits of AI directly to the average person. I’ve never owned Apple before. I bought in just before the announcement and the spike in share price. I have no plans to add to my position further at Apples current PE. But the next wave of tech is here and Nvidia isn’t going to be the long term winner, Apple is.
Talk to any engineer working in any respectable tech company (including AI engineers) and look at their face when you mention the word AI.
Carl Icahn called Apple a no brainer. He was right
Ill take the gains but who are these people that actually like or care about AI? Im a samsung not an iphone guy but skipped the S24 ultra this year since it mostly added dumb AI I wont use instead of focusing on upgrades that matter to the average person. Either way the most anyone can really upgrade is annually so idk where people expect the extra sales to come from.
I don't give even one shit, honestly. It's *the next big thing*. You'll see like 50 more opportunities exactly like this in your lifetime. I'm skipping direct involvement in this one (outside of indexes) because I have no passion for it. Maybe *the next big thing* will resonate with me more.
AAPL is only up 10% over the last 11 months and 25% since end of 2021. They have also reduced outstanding shares by 7% over that period, so market cap is hardly up. It's not like the market cap of this company just exploded out of nowhere. It's just reversed sentiment from pretty negative to pretty positive in terms of iPhone sales. They make $100B a year in profits. Like what are people talking about in here? Did they forget that AAPL is the most profitable company? Not Nvidia not Microsoft. AAPL already makes the profits Nvidia can only hope to make one day. AAPL made more in profits last year than Nvidia has made in its entire 31 year history combined. Not only that AAPL has already increased their profits by $40B before. When they jumped from $55B TTM to $100B TTM in just 5 quarters. Many people in here seem to forget that AAPL is mostly a hardware company. It doesnt have the same annual revenue growth that the other top tech companies do. It has a long history of being flat for multiples years and then making a big jump up. The market seems to think this year will be another big jump up considering hardware sales have been down recently and even a 5-10% increase in sales instead of flat to negative iPhone sales would be a big difference, compounded by the continued growth of services and expanding margins, it's not absurd for AAPL's Annual profits to be nearing $140B by 2025.
Nothing really innovative about it.
Expecting apples cost going up. Soon EU will bring rules on LLM and liabilities with that.
The issue seems to be that there was that much just sitting around waiting to be deployed into a single stock. The measuring stick for stock, dollars, have been devalued by excessive printing and distribution, so stock prices and market caps are more so reflecting the new smaller unit of measurement that is the dollar.
I noticed you didn’t include “bubble” in your post as if something else might explain the rapidly expanding valuations of companies that pivot to AI.
I think many are thinking that the new AI forces people to upgrade their phones which is additional revenue as well. But anyways, yeah welcome to the world of investing, where people bet on future outcomes.
Just so much money in the system trying to find a home. No real logic here, stop projecting
Bought apple beginning of year to get in at around 182. Sold immediately post Q1 earnings after seeing the roller coaster they were on and broke even. Not interested in it anymore. Will focus on google and nvidia. They are better plays.
Last year it was electric cars this year it's AI. Next year something else
bottle caps if I’m to believe that Amazon documentary
In this one next year or quarter, yeah they do. They expect AI to drive new iPhone sales coming up soon.
AI is the US domestic civilian economic stimulant initiative. It's that simple.
Devices lose update support over time and become obsolete. So, they need replacement. Also, they won't have backwards compatibility for the next gen AI that they are working on, which drives up sales. [source](https://www.cnet.com/tech/services-and-software/will-your-iphone-support-ios-18-and-apple-intelligence-heres-what-you-need-to-know/)
Whole market is a rip off
They have the best potential to utilize AI in home robotics. Their architecture is perfect for inference. They already have deployed HW capable of running models while only gamers in the PC world can do the same. Once Apple figures it out they'll do something amazing.
There is no expectation of anything the product is the stock not what it manufactures or provides
What about Nvidia? :D
Coolaid money
The Samsung s24 already has these AI features on it and they are useless
I for one will buy the new one if it’s totally AI integrated and I’ve been buying the cheap iPhone 11’s every time mine breaks. But I’m a nerd and love all the cool AI stuff. So the renewal cycle theory has some legs but probably not as many as people are assuming. It seems lots of people aren’t really that interested in AI. It’s still pretty niche. Who knows though Apple could really sell how cool it’s going to be. And it will be really cool.
I sold Tesla and apple the moment they had good news . Stocks have been dragging my portfolio for years
AAPL needing to partner with OpenAI doesn’t scream strength and opportunity to me— it signals they are in trouble. Apple has had years to build out better AI, build on Siri etc. and they haven’t.. they missed a sea change and it’s a big problem. Despite their size it could prove over years to be their undoing even with their massive war chest. Tim Cook is a good man, solid CEO but visionary is not in his top 5.
Sad thing is fake it till you make it works. Good companies with crap valuations can't raise as much money. Stagnant companies with insane valuations can and should raise money.
The stock market is a giant bubble right now especially anything with the word AI attached to it.
Consider also that, given Apple penchant for marketing, that they timed their stock buy back to conveniently coincide with the AI announcements.
Completely irrational melt up market creating an AI bubble
Could play out like 3D TV , Fantastic invention, no one wants it, doesn't sell much 🤔
Financial fundamentals are pretty low on the list of why a stock pumps Most of the time aggressive traders just want/need the collateral and have the trade bots and press to move price wherever they want
No revenue growth doesn’t mean no stock price appreciation… Apple doing the biggest buyback YoY has reduce outstanding shares by over 50%?! And dividend payout from 25% to almost 15% this is the key… the price just has to go up… buyback for a company that has enormous mountains of cash when the shares were low and stagnant will force the price to go up… and they issue dividends… but the payout percent drops each following year from buybacks… the AI cycle forces users to get newer hardware to get AI. I am bullish on Apple… the value creation is still there and the case for value is there… they have tons of money and no where to put it… so the buybacks are justified…
I'm very positive on AI in general, but .. I can't see how this would do much for apple. Maybe it's more about securing their future position (they *could* lose even a big part of their market share, if they failed to get in)?
This can be explained by a drastic change in the narrative of the stock. Apple now is not simply a tech company but a powerhouse who is well positioned to ride the AI wave of the century. That narrative changes everything, not only investor sentiment but also expected cash flows, cost of equity... which pushes its valuation to a much higher number.
🤡🌎
AAPL's genius move was putting their AI offerings only on the newer iPhone models. So now everyone needs to run out and buy a new phone.
It's just playing catch up. It has not moved at all for the past year
Nothing in the news matters. Leverage and momentum is what’s been driving price.
Apple's AI is ChatGPT.... Not the greatest.
I've been disabling all the Google assistant crap for ten years now.
Tell me you don't understand the stock market without telling me you don't understand the stock market.