From Alex Eule’s “Apple’s New MacBooks Have Delighted Critics. Why Investors Should Care Too.” published Friday by Barron’s:
Apple consumers are happy again, but what does it all mean for investors? Shares of Apple are down 3% since the M1 laptop reviews came out on Nov. 17. The indifference isn’t surprising, given that Mac sales were $28.6 billion in Apple’s latest fiscal year, just 10% of the company’s total sales and roughly half of what its fast-growing Services segment brought in.
Yet investors shouldn’t tune out Mac developments.
“While it’s hard to do some additive math here, we think more importantly that it just further underscores Apple’s value and perhaps previously hidden value,” wrote Robert Maire, a longtime chip observer who runs boutique firm Semiconductor Advisors, in a note this past week. While it might seem far-fetched, he notes that Apple could even sell its new chips to the profitable server market. “Power and cooling are perhaps the biggest deals in the server world, and so far, one of the biggest selling points of the M1 is its low power and fans [that] never go on. The power savings alone could be the reason to switch.”
Apple’s price/earnings ratio has basically doubled in the past 18 months. It’s going to need a few surprises to justify that rich multiple. The M1 chip is an excellent start.
My take: Does Apple want to enter the server market? Not much consumer surprise, delight or life-enrichment in that joyless space.