Steven Philips on Jerry Doyle: The Street's Bull Case Is Converging Toward $400 - '“The end of the world as we know it! But I feel fine!”'
on Barron's: Nvidia's PE today is reminiscent of Apple's 20 years ago - 'Apple had 2 main drivers to a higher P/E. The first was the realization that consumers were probably going to own iPhones for a VERY long time. The iPhone had become a consumer electronics staple. The second is Services. This became the quantifiable proof that folks would be locked into and entrenched in the ecosystem going forward. These two things helped subside fears that Apple would be the next RIM. Wall Street loves certainty, especially into the future, and Apple was able to provide that. Hence, the P/E or ISM (Gregg Thurman’s aptly named Investor Sentiment Multiple) pretty much doubled, demonstrating Wall Street’s new found confidence.'
on Jerry Doyle: The Street's Bull Case Is Converging Toward $400 - '@Richard Gayle – Richard, your mother obviously made an exceptionally good decision…and, it’s great that it was a decision which continues to have positive results for her family. As executor of my parent’s trust, when my father passed in 2004, one of my responsibilities was to pass $106,000 to each of the three sons. My wife and I had been 100% invested in AAPL since 2000, so I encouraged both of my brothers to consider investing that money in AAPL. My younger brother decided not to do so, despite my encouragement(OK, bugging)…but my older brother did, finally, invest the money in AAPL. After 6 months or so, he told me he wanted to put half the amount in RIM(Remember them?) to hedge his bet, and after constant bugging on his part, I finally did so. Less than a month later he decided he made a mistake, so I helped him sell the RIM stock and go back to being fully invested in AAPL. Anyway, my brother passed away a couple of years back, but before he did, his AAPL stock value at one time, exceeded 5 million dollars. So, a person who was a free-lance photographer, and never seemed to have 2 quarters to rub together, ended up having a wonderful nest egg to pay all of his *many* expenses when he was no longer able to do so. I still wish I could have convinced my younger brother to invest in AAPL but I’m thankful for what the AAPL investment ended up doing for my older brother.'
on Barron's: Nvidia's PE today is reminiscent of Apple's 20 years ago - 'I couldn’t agree more. Also, many of those customers aren’t necessarily profitable.'
on Jerry Doyle: The Street's Bull Case Is Converging Toward $400 - 'Of the articles written about Broadcom’s Baltra ASIC, this one may be the best. https://kocitech.org/broadcom-apple-chip-deal-2031/'
on Jerry Doyle: The Street's Bull Case Is Converging Toward $400 - 'Sure, but what’s Tim Long predicting? /s'
on Thesis: AI hardware grows exponentially in two dimensions. Apple devices in only one. - 'PED — translation: “Derivative of the sigmoid” => slope of the S-shaped curve.'
on Thesis: AI hardware grows exponentially in two dimensions. Apple devices in only one. - 'People love to spin bullish scenarios. Long ago I worked at a small manufacturing concern. The CEO was crowing about our 30% growth rate. The engineers calculated that if we kept growing at 30% then by the end of the century the world would be ten feet deep in our product. Anthropic is claiming an addressable market of $30T, which is about the GDP of the US. Currently they are not profitable. Lots of room to grow.'
on Jerry Doyle: The Street's Bull Case Is Converging Toward $400 - 'Some would argue, that in the current context, a lofty target sits within the realm of irrational exuberance. Where the faux exuberant focus of renaming bodies of water as a punitive measure only demonstrates an overall condition of perverse irrationality. That parasite is doing harm on both the supply and demand sides of the market. Do I think Apple is making the right moves that deserve a trajectory of $400? Sure, Apple is firing on all cylinders. But it has to be tempered with reality. Affordability is going backwards and a completely unregulated(generally why we have government…, to regulate an economy) rollout of data centres is exerting extraordinary supply constraints for Apple. There are headwinds to $400.'
on Thesis: AI hardware grows exponentially in two dimensions. Apple devices in only one. - 'From reader Walter Milliken: I’d send that thesis back for serious rework before granting a degree… Problem #1: Internet service isn’t actually flat-rate all-you-can eat, and has experienced price growth over time as people wanted, and were willing to pay for, more bandwidth. Also there was a second growth dimension, it just wasn’t owned by the access providers, though they tried to do that. Instead, it was in the web services companies. So it was there, just not bundled together. See also the war over net neutrality, which was entirely about the access providers trying to also capture the value of that second dimension, without actually providing it. Problem #2: Apple has actually experienced 2D growth: first in number of users, and second in growth in hardware prices, as iPhones have gained useful capabilities that users will pay more for, as well as in their adjacent Services business. The author seems to think these dimensions are multiplied to get a final growth in value, but it’s more likely they are mostly additive; they certainly are for Apple, as Services mostly grew after user adoption stabilized. Problem #3: the author seems to assume that users will consume a substantially growing number of tokens. This overlooks the fact that end users don’t like paying for services, so they will have a limited appetite for AI tokens unless those are providing obvious direct value. Given how web services evolved, the more likely track is that tokens will be paid for by the existing web service providers or their successors, and they are likely to buy them from the lowest bidder that provides adequate service – cloud AI is looking a lot like a commodity service similar to cloud storage/compute, which is going to drive down prices or put a lid on token consumption pretty quickly. Token growth will certainly be fast if they’re useful and either free or super-cheap, but that cloud infrastructure and power ain’t cheap, so we’ve recently seen a radical change in AI pricing models very quickly. Problem #4: the author assumes AI will continue to be cloud-based; if it mostly moves onto the edge devices like I suspect, the whole thesis falls apart immediately. .'
on Thesis: AI hardware grows exponentially in two dimensions. Apple devices in only one. - 'Five years ago these X bros were waxing the same poetic about Bitcoin.'
on Jerry Doyle: The Street's Bull Case Is Converging Toward $400 - 'If P/E doesn’t grow, then revenues would have to grow. What will drive earnings going forward for a more than 25% growth rate? In particular, how does AI in its various forms produce more revenue for Apple?'
on Barron's: Nvidia's PE today is reminiscent of Apple's 20 years ago - '“Nvidia Stock Is Starting to Look a Lot Like 2010s Apple” – except Apple wasn’t at all rewarded, as it’s stock was valued “like a railroad going out of business”, as no less a luminary than Horace Dediu put it back then. Hey, no sour grapes here, just facts. I’ve been a happy AAPL camper ever since they started up their stock buyback program. Not happy AT ALL before that….'
on Jerry Doyle: The Street's Bull Case Is Converging Toward $400 - 'So we all agree that AAPL won’t languish at $315 for the rest of eternity? Pardon the snark, but Jerry’s gotten plenty of attention lately. Moving right along . . .'
on Jerry Doyle: The Street's Bull Case Is Converging Toward $400 - 'Best thing I did wrt Apple was tell my mother how exciting it was for Steve Jobs to come back. She bought $1000 in 1997 (and some more over the years). They were a large part of my parent’s retirement funds until they died. My brother and I got those shares when she died, forming a large portion of our retirement funds. I expect my son will get them when I die. Multigenerational wealth because of Apple.'
on Jerry Doyle: The Street's Bull Case Is Converging Toward $400 - '‘ I appreciate Doyle’s contributions so much more when he’s not wearing his red hat.’ I think many of us (3.0 readers) are able to look past the hat colors to glean the Apple wisdom of many posters; albeit sometimes it takes more than a little effort. So I too appreciate when posters leave their political hat behind, even while discussing the effects of politics on Apple.'
on Barron's: Nvidia's PE today is reminiscent of Apple's 20 years ago - 'I see a forward PE of 24 for NVDA, vs 33 for Apple. It would seem NVDA has a lot of room to run. Hard to believe how much $$ is sloshing around out there.'
on Jerry Doyle: The Street's Bull Case Is Converging Toward $400 - 'Jerry’s $3,500 investment in Apple initiated for his daughter back when Steve Jobs returned to run Apple keeps going higher year after year. Geaux Jerry.'
