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People say Apple has been a winner in AI by doing nothing. In my opinion, this is false and it is going to start showing as soon as this quarter.
The reason is that AI-caused shortages in chips, memory will hit smartphones and consumer devices hard. Because the margins are far greater for AI chips and HBM memory, companies bidding for TSMC, SK Hynix, and Samsung chip wafers can outbid Apple.
This means Apple will have to make a choice: eat the higher costs and lower margins for iPhones, iPads, Macs, etc or raise prices and sell fewer devices. Up until now, they didn't have to do this because they had longer term contracts with TSMC and RAM makers. But this is going to be less true for Apple as time passes.
Apple is in a better position than other consumer focused companies because their pricing power is stronger but they're not immune to this shortage. I think they will have an amazing financial results last quarter, but their guidance will cause their stock to drop or stay flat.
The problem for Apple is that they won't have the AI revenue to make up for the consumer problem. They don't have AI revenues from Azure, Google Cloud/Gemini, or AWS. And they don't have the growth from LLM training like OpenAI or Anthropic.
I speak from being an AAPL investor for many years. I stopped investing in Apple when ChatGPT released. I focused on AI chip and energy companies instead. I still own AAPL but I've not bought a single more share in 3 years+.
That said, I won't sell Apple because their products are still very sticky and they're the best at on-device AI chips through Apple Silicon. They have a chance to be a strong local AI player in the future. However, the next 1-3 years might be rough for Apple.
**My history and views: I've been early and correct in every single post**
* 2 months ago, I told you to focus on companies that produce the physical goods needed for AI to function: https://www.reddit.com/r/stocks/comments/1r2nbln/ai_play_isnt_just_gpus_its_everything_physically/
Every single company I mentioned is way higher. I had negative upvotes and non-believers in the comments section.
* One month ago, I called the CPU shortage and told you to buy TSMC, Intel, AMD and among others: https://www.reddit.com/r/stocks/comments/1rkep5v/the_upcoming_cpu_shortage/
TSMC up 20% in 1 month, Intel up 87%, AMD up 70%. Vast majority of comments were non-believers.
* Just before Intel earnings, I told you people are still underestimating CPU shortage:
https://www.reddit.com/r/stocks/comments/1stkmwz/reminder_cpus_are_in_huge_demand_intel_earnings/
Intel up 23% after earnings. Vast majority of comments were non-believers.
* I'm a SaaSpocalypse believer and do not invest in software companies. I believe software will be cheap to produce but physical things will cost more in the future: https://www.reddit.com/r/stocks/comments/1so605s/figma_falls_77_as_anthropic_introduces_claude/
* Finally, my general view of AI is that there isn't a bubble (yet). Everything right now is being driven by real demand. Just look at how desperate Anthropic is for more compute so they can keep growing. Suppliers like TSMC, Samsung, SK Hynix and even Intel are still very cautious in investing in more factories. This truly doesn't smell like a bubble to me. There are overhyped companies here and there, but we are not in a bubble (yet). When OpenAI and Anthropic IPOs and their valuation shoots to $5 or $6 trillion, then we could be in a bubble.