"I Don't Think Apple Has A Chance" - The Brutal Truth About Apple - Chamath Palihapitiya

Watch on YouTube ↗ | June 23, 2025 at 20:35 | 8:22 | All-In Podcast

Speakers

Chamath Palihapitiya — CEO, Social Capital

Thomas Laffont — Managing Director, Coatue Management

Craig Federighi — Executive, Apple

Summary

Chamath Palihapitiya makes a blunt bear case on Apple: the iPhone line has stalled, the remaining growth comes from accessory and cable churn, and 17 years of linear success have left the culture unable to build the next breakthrough device. A guest, Thomas, pushes back, noting Apple already moved its gross-profit base from over 90% one-time iPhone hardware to roughly 40% recurring, and asks whether they can repeat that with AI. The discussion then turns to recent IPOs, with Circle and CoreWeave's near-identical charts read as the market paying up for open-ended growth levered to crypto and AI. Chamath extends that into a call to be less long the low-margin, low-growth S&P 493 and more exposed to companies levered to future themes.

Chamath: iPhone revenue has stalled and accessory sales are revenue optimization, not a strategy.
Chamath: an AirPods business several times larger than OpenAI makes internal disruption culturally impossible.
Siri is cited as a decades-long failure versus Google and Grok voice assistants on a Pixel.
A Craig Federighi clip argues the watch and phone already are the personal AI devices.
Guest Thomas counters that Apple already shifted gross profit from over 90% hardware to about 40%.
Circle and CoreWeave IPO charts are nearly identical, pricing crypto and AI leverage alike.
Magnificent 7 dispersion is expected to widen as AI produces clear winners and losers.
Chamath: the S&P 493 averages 12% margins and single-digit growth, so hedge or cut legacy exposure.

Ideas

Chamath Palihapitiya CEO, Social Capital 0:00

Apple cannot build the next breakthrough.

Chamath says Apple has no chance of producing the next breakthrough product. The revenue chart he puts up shows the iPhone line has completely stalled out, so the incremental money now comes from 'other hardware': replacement AirPods, new cable types, accessories. He calls that revenue optimization born of designed inefficiency, a tactical short-term play rather than a strategy, and argues a company that grows this way cannot create something exceptionally unexpected. Culturally it is worse than that: when the AirPods business alone is two to three times bigger than OpenAI, any internal strategy meeting about a new bet gets shut down by an MBA pointing at the size comparison. After 17 years of unmitigated linear success the organization cannot retool itself, like asking Michael Jordan to become an all-star baseball player, and Siri is the proof - 27 years in it can barely set an alarm, play a song or give directions while rival voice assistants execute real tasks. The breakthrough will come from a new company with no ties to the past, and it is fine for Apple to be creatively destroyed the way HP was.

Thomas Laffont Analyst 4:55

Apple already pivoted once; watch again.

Thomas pushes back on the claim that Apple's management is incapable of reinvention, arguing they have already done it once in a way the revenue chart does not show. Covering the stock as an analyst, he watched a period when over 90% of Apple's gross profit came from the one-time hardware sale of an iPhone, and nobody believed the company could ever get off that drug; a decade later that share is down to roughly 40%, with the rest a recurring gross-profit base. He thinks Apple gets too little credit for that transition, while conceding the services pivot may have been easier than the AI challenge ahead, so he frames it as an open question to monitor rather than a reason to write the company off.

Thomas Laffont Analyst 6:01

Market pays up for AI, crypto leverage.

Thomas points out that Circle and CoreWeave, two companies that IPO'd recently, have almost identical charts even on a dollar share-price basis, and reads that as evidence of how the market is repricing. Investors are starting to accept that AI will create clear winners and losers - the same dispersion argument applied to the Magnificent 7 - and are asking how to be positioned for the next five years and where the big open-ended growth opportunities are. One of the two names is levered to crypto and the other to AI, the two themes investors want exposure to, so the parallel move is not a surprise to him but a sign the two trades are intertwined.

Chamath Palihapitiya CEO, Social Capital 6:43

Be less long legacy, own AI.

Chamath argues the rest of the index is the wrong place to own risk: the average profit margin of the S&P 493 is about 12% and average growth is single digits, so there is little reason to be long companies that could be decapitated by something two kids in a garage build with OpenAI or Grok. Owning that cohort is being long the past. His conclusion is to at a minimum hedge it - be less long legacy companies and put capital into investable companies levered to the big future themes of AI and crypto. That, he says, is why the IPOs levered to those two trends absolutely rip, while recent IPOs of companies not levered to them get treated like the S&P 493: fine, reasonable gains, but nobody wants to be bag-holding old legacy businesses.

Chamath Palihapitiya CEO, Social Capital 6:43

Be less long legacy, own AI.

Chamath argues the rest of the index is the wrong place to own risk: the average profit margin of the S&P 493 is about 12% and average growth is single digits, so there is little reason to be long companies that could be decapitated by something two kids in a garage build with OpenAI or Grok. Owning that cohort is being long the past. His conclusion is to at a minimum hedge it - be less long legacy companies and put capital into investable companies levered to the big future themes of AI and crypto. That, he says, is why the IPOs levered to those two trends absolutely rip, while recent IPOs of companies not levered to them get treated like the S&P 493: fine, reasonable gains, but nobody wants to be bag-holding old legacy businesses.

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This All-In Podcast video, published June 23, 2025, features Chamath Palihapitiya, Thomas Laffont discussing AAPL, CRCL, CoreWeave, S&P 493, AIQ. 5 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Chamath Palihapitiya, Thomas Laffont · Tickers: AAPL, CRCL, CoreWeave, S&P 493, AIQ