AAPL Perfect "Mouse Trap" for AI: Lance Roberts on Outlook Beyond iPhone Duo

SPEAKER_1 (0:00)

Time to go deep on Apple. Apple is our tech spotlight today. And joining me right now, Lance Roberts, Chief Investment Strategist, RIA Advisors. Good to see you.

So it's John Ternes, first month running the show at Apple. How do we think the new CEO is doing?

Lance Roberts (0:19)

Well, so far so good, but like you said, it's only been a month. We haven't been through an earning cycle yet. That's coming up later this month, actually like next two weeks.

So it'll be very important for Wall Street to see how he handles the earnings announcements, the conference calls, those types of things. But yeah, so far so good.

SPEAKER_1 (0:39)

So far so good. I mean, he was viewed also as sort of the next level for AI. Do we now see Apple in a different light at all than we did a month ago? Is it more of an AI company than it was a month ago?

Lance Roberts (0:54)

Not yet. It's going to take a while. They're pretty far behind the curve in terms of implementing AI. For instance, Samsung has already made a big push in that direction. So it is coming. I'm not saying it's not coming, but they haven't really integrated a lot of it yet. That's going to be, I think, one of the big challenges is now for him is just simply to pay a little bit of a catch up on the AI side.

Look, Apple is famous for this.

Samsung had a foldable phone seven years ago, and so Apple is just now coming out with the iPhone Duo. What they do very well is see what works in the market, let other people figure it out, and then they come in and build a better mousetrap. That's why we own Apple, we've owned it for a long time. They have a very big culture base around them, so I wouldn't put any big heavy weight on the fact that they're a bit behind the curve on AI. That's their normal kind of modus operandi for developing product.

SPEAKER_1 (1:52)

In 10 days, you can actually pre-order this phone, right? On October 16th, it's the pre-order, and then October 23rd is the shipping. What did we think of the price point?

Does it seem doable at $19.99?

Lance Roberts (2:07)

Well, so that's the starting price, right? So that's for the 256-gigabyte model.

The Samsung S26, their high-end phone is about $1,200. So there's a pretty big price gap between these two phones. I think it's going to be very interesting. First of all, these phones are mostly financed through people's phone plans. They're not coming out of pocket with $2,000 to buy a phone. They're just trading in their current phone and dropping the price in their current phone plan. I do think this is going to be a very interesting thing to look at, considering that we are seeing weakness in wage growth. We are starting to see some contraction in personal savings rates.

And expectations right now are for 6 million shipments this year, 17 million shipments next year, sorry, 15 million shipments next year. That's about 30 billion in revenue. So this is not a small test for the consumer. I think these numbers are accurate. I think we'll probably get there. But I think it's going to be a really interesting tell to see how fast this adoption rate picks up given the state of the consumer right now.

SPEAKER_1 (3:11)

You did start the notes here with how you're feeling bullish overall about this name. What is driving that bullishness?

Lance Roberts (3:21)

Well, a couple of things. First of all, like I said earlier, we've owned Apple for a very long time. There's a couple of reasons we own Apple. The first is simply its weight within the index. We have a tremendous amount of passive flows that come into the index every single month. People are contributing to 401k plans, they're buying ETFs on a regular basis. Apple is in about 450 different ETFs. Every time somebody buys an ETF, they're buying Apple.

Part of our reason for owning Apple is set aside from the fundamentals, is simply capturing the passive flows that come into the stock. But secondly, and still very importantly, the fundamentals for the company are good. They are expensive. This is a company that trades at 36 times 4PE, 38 times trailing PE. They've got a PEG ratio of a little bit over 3 But an earnings growth is running about 20%. So as long as they can hit their numbers, the stock should do okay. I don't think there's a tremendous amount of upside in this company. It's a very mature company. You're talking about AMD in the last segment.