1 00:00:03,920 --> 00:00:07,080 Speaker 1: This is not an accidental infringement. This is a deliberate 2 00:00:07,720 --> 00:00:11,719 Speaker 1: taking of our intellectual property. Apple's internal documents that we 3 00:00:11,800 --> 00:00:14,600 Speaker 1: saw in court showed that they knew their product wasn't 4 00:00:14,640 --> 00:00:17,520 Speaker 1: good enough to be used medically. There needs to be 5 00:00:17,760 --> 00:00:22,000 Speaker 1: an honest dialogue. There needs to be an apology. These 6 00:00:22,000 --> 00:00:25,040 Speaker 1: guys have been caught with their hands and the cookie jar, 7 00:00:25,160 --> 00:00:28,480 Speaker 1: and instead of being embarrassed and doing the right thing, 8 00:00:28,880 --> 00:00:31,480 Speaker 1: they're blaming everybody, and they're fighting everybody for me. 9 00:00:32,120 --> 00:00:32,479 Speaker 2: All right. 10 00:00:32,520 --> 00:00:35,159 Speaker 3: That was Joe Keiani, CEO of Massimo. It's the company 11 00:00:35,320 --> 00:00:38,080 Speaker 3: at the center of Apple's watchbad after the International Trade 12 00:00:38,080 --> 00:00:41,760 Speaker 3: Commission found Apple infringed on patents from Massimo. The USTR 13 00:00:41,960 --> 00:00:45,400 Speaker 3: now saying two patents were infringe including the one from 14 00:00:45,440 --> 00:00:48,400 Speaker 3: that company. So great setup to see what Dan ives, 15 00:00:48,400 --> 00:00:50,680 Speaker 3: who definitely likes Apple, see what he has to say. 16 00:00:50,680 --> 00:00:54,320 Speaker 3: He's senior equity analyst at Wedbush, joining Katie Manis and 17 00:00:54,400 --> 00:00:55,560 Speaker 3: myself here in studio. 18 00:00:55,600 --> 00:00:57,720 Speaker 2: Great to have you here, Happy holidays. 19 00:00:57,800 --> 00:00:58,959 Speaker 4: You too great to be here. 20 00:00:59,040 --> 00:01:00,760 Speaker 3: Is it going to be a happy year for Apple? 21 00:01:00,840 --> 00:01:02,120 Speaker 3: It feels like it's going to get off to a 22 00:01:02,200 --> 00:01:02,640 Speaker 3: rough start. 23 00:01:03,000 --> 00:01:05,119 Speaker 4: I think it's time to get out the popcorn because 24 00:01:05,160 --> 00:01:08,240 Speaker 4: in my opinion, this is the next stage of I 25 00:01:08,280 --> 00:01:10,560 Speaker 4: think the growth phase in Cooper Tino, and I think 26 00:01:10,640 --> 00:01:11,560 Speaker 4: we'll give you a quit time. 27 00:01:11,760 --> 00:01:12,440 Speaker 2: How do you like. 28 00:01:12,400 --> 00:01:14,119 Speaker 3: Factor in this kind of stuff. I can't buy a watch. 29 00:01:14,120 --> 00:01:15,400 Speaker 3: I need a new watch, and I can't buy it 30 00:01:15,480 --> 00:01:15,759 Speaker 3: right now. 31 00:01:15,920 --> 00:01:19,440 Speaker 4: Look, we're talking less than one percent of disruption from 32 00:01:19,480 --> 00:01:22,000 Speaker 4: Apple Watch, you know, in terms of in the actual quarter. 33 00:01:22,040 --> 00:01:23,800 Speaker 4: And I think, look, it just speaks to they're going 34 00:01:23,880 --> 00:01:27,679 Speaker 4: to have patent issues like this on healthcare. But there's 35 00:01:27,720 --> 00:01:32,039 Speaker 4: a renaissance of growth on the iPhone units services double digits. 36 00:01:32,360 --> 00:01:33,960 Speaker 4: And that's why I think a lot of the Bears 37 00:01:34,040 --> 00:01:36,880 Speaker 4: right now they're deep in those caves in hibernation mode. 38 00:01:36,920 --> 00:01:38,920 Speaker 4: I think a year from now we have a four 39 00:01:39,040 --> 00:01:41,000 Speaker 4: trillion dollar mark cap on Apple. 40 00:01:41,360 --> 00:01:45,560 Speaker 5: You say the Bars had a great fictional story, okay, 41 00:01:45,640 --> 00:01:48,440 Speaker 5: and Netflix fictional Netflix story. 42 00:01:48,480 --> 00:01:50,880 Speaker 2: We all want to be in Apple. I got I 43 00:01:50,920 --> 00:01:51,800 Speaker 2: got a handle tea. 44 00:01:51,880 --> 00:01:56,160 Speaker 5: This shirt just screams, you know, full full of confidence, 45 00:01:56,360 --> 00:01:58,320 Speaker 5: full of vigor. But you look at the China story, 46 00:01:58,400 --> 00:01:59,920 Speaker 5: so it makes sense of this for us. How do 47 00:01:59,920 --> 00:02:01,720 Speaker 5: you go to four trillion dollars when you still got 48 00:02:01,720 --> 00:02:04,200 Speaker 5: the government pushing back against Apple products. It was a 49 00:02:04,240 --> 00:02:05,400 Speaker 5: headline just in December. 50 00:02:05,440 --> 00:02:06,080 Speaker 4: I mean, is that. 51 00:02:06,120 --> 00:02:10,559 Speaker 2: Myth or is that a headwind? I think it's a headwind. 52 00:02:10,800 --> 00:02:13,720 Speaker 4: And ultimately my view in terms of China is that 53 00:02:13,840 --> 00:02:17,320 Speaker 4: I'm not saying it's Roses in Champagne in Beijing with Apple, 54 00:02:17,520 --> 00:02:20,639 Speaker 4: but we are seeing growth and that's something we've seen 55 00:02:20,680 --> 00:02:22,960 Speaker 4: come out of Asia checks even over the last week, 56 00:02:23,240 --> 00:02:25,880 Speaker 4: because you have one hundred million iPhones in China and 57 00:02:25,919 --> 00:02:29,440 Speaker 4: the window of an upgrade opportunity as those upgrade and 58 00:02:29,480 --> 00:02:33,120 Speaker 4: look for Huawei, it's a good phone, but realistic it's 59 00:02:33,120 --> 00:02:36,760 Speaker 4: an iPhone twelve. I'm seeing from an actual functionality perspective. 60 00:02:37,120 --> 00:02:39,120 Speaker 4: So I do think that it's a head when they 61 00:02:39,120 --> 00:02:41,440 Speaker 4: have to contend with But it is the hearts and 62 00:02:41,520 --> 00:02:43,639 Speaker 4: lungs of the Apple story. And that's why a lot 63 00:02:43,639 --> 00:02:47,720 Speaker 4: of the bears at five hundred billion, a trillion, trillion 64 00:02:47,760 --> 00:02:52,160 Speaker 4: and a half two, it's all about the China. It's 65 00:02:52,200 --> 00:02:54,640 Speaker 4: all three trillion, I think, going to fourtunion. It's always 66 00:02:54,720 --> 00:02:58,120 Speaker 4: about that big bad wolf, the China story and the 67 00:02:58,160 --> 00:03:00,600 Speaker 4: actuality China has actually been fuel on the engine. 68 00:03:00,720 --> 00:03:02,800 Speaker 6: Well, let's talk about what the bears are saying right now, 69 00:03:02,840 --> 00:03:05,080 Speaker 6: because they're saying, you think about in terms of the 70 00:03:05,120 --> 00:03:07,839 Speaker 6: product lineup that Apple really hasn't had a hit since 71 00:03:07,840 --> 00:03:10,040 Speaker 6: the AirPods, and that was all the way back in 72 00:03:10,080 --> 00:03:12,800 Speaker 6: twenty sixteen. So you talk about this new growth, but 73 00:03:13,160 --> 00:03:15,400 Speaker 6: from the product lineup, where is it going to come from? 74 00:03:15,560 --> 00:03:17,880 Speaker 4: Well, first off, the install base, it's on powerlel It's 75 00:03:17,880 --> 00:03:20,519 Speaker 4: the best install based in the world. So just from 76 00:03:20,520 --> 00:03:23,280 Speaker 4: an install based perspective, you have two hundred fifteen million 77 00:03:23,280 --> 00:03:25,280 Speaker 4: iPhones in a window of an upgrade opportunity. I think 78 00:03:25,320 --> 00:03:29,040 Speaker 4: that's why iPhone fifteen so far Christmas came earlier strong 79 00:03:29,080 --> 00:03:32,720 Speaker 4: holiday season, but for twenty twenty four. German's talked about 80 00:03:32,760 --> 00:03:36,200 Speaker 4: this as well. I believe you're gonna have not just 81 00:03:36,440 --> 00:03:38,840 Speaker 4: new phones that come out from an iPhone sixteen, but 82 00:03:38,920 --> 00:03:42,840 Speaker 4: we believe you're gonna have the Apple the iPhone app store, 83 00:03:42,840 --> 00:03:45,760 Speaker 4: which is gonna be an AI app store focused on 84 00:03:45,800 --> 00:03:48,720 Speaker 4: AI apps. That's gonna be something that's gonna be incremental 85 00:03:48,760 --> 00:03:52,200 Speaker 4: for services, and I think that's very important. You combined 86 00:03:52,280 --> 00:03:55,400 Speaker 4: with Vision Pro, and we believe more and more products 87 00:03:55,440 --> 00:03:57,440 Speaker 4: coming out that they flex the muscles. 88 00:03:57,560 --> 00:04:00,200 Speaker 3: Dan, is there a bear story though on Apple? Well, 89 00:04:00,240 --> 00:04:01,720 Speaker 3: I mean I think if Tom Kean was here, and 90 00:04:01,760 --> 00:04:03,160 Speaker 3: I know this is how we fail. We are an 91 00:04:03,200 --> 00:04:05,400 Speaker 3: Apple family and when somebody goes to buy something like 92 00:04:05,480 --> 00:04:06,160 Speaker 3: no Sorr, you can't do that. 93 00:04:06,240 --> 00:04:08,000 Speaker 2: It's going to be an Apple product because that's been 94 00:04:08,120 --> 00:04:10,000 Speaker 2: our infrastructure, that's our network. 95 00:04:10,080 --> 00:04:13,800 Speaker 3: No green text bubbles, No, exactly, Well, there's an app 96 00:04:13,800 --> 00:04:15,640 Speaker 3: that I think people. 97 00:04:15,440 --> 00:04:16,920 Speaker 2: But I just that installed base. 98 00:04:17,080 --> 00:04:19,640 Speaker 3: I'm looking at what twenty twenty four revenue estimate of 99 00:04:19,640 --> 00:04:22,760 Speaker 3: three hundred and ninety seven billion dollars. Every time the 100 00:04:22,760 --> 00:04:25,680 Speaker 3: Apple numbers crossed, they're off the charts. Even if the 101 00:04:25,720 --> 00:04:29,039 Speaker 3: growth isn't significant, there's still that installed base is enough 102 00:04:29,040 --> 00:04:30,040 Speaker 3: to keep a lot of momentum. 103 00:04:30,080 --> 00:04:33,200 Speaker 4: And if Keene was here, would he be focused on 104 00:04:33,320 --> 00:04:38,000 Speaker 4: and it kind of is and Keen's here just like. 105 00:04:37,440 --> 00:04:43,159 Speaker 2: I'm an incarnation of talking I'm kidding here, it's an AI. 106 00:04:43,640 --> 00:04:46,200 Speaker 4: It's AI generated is there? 107 00:04:46,680 --> 00:04:47,160 Speaker 2: Sorryful? 108 00:04:47,600 --> 00:04:51,080 Speaker 4: But look realistically, it's about value. Look if you look 109 00:04:51,080 --> 00:04:54,159 Speaker 4: at valuation, you look at the cash flow generation of Apple. 110 00:04:54,560 --> 00:04:56,279 Speaker 4: There we're going to see over the coming years the 111 00:04:56,360 --> 00:04:59,880 Speaker 4: e but that margins are expanding. Now then the bear story, 112 00:05:00,240 --> 00:05:02,800 Speaker 4: it's look a lot of the bears they just look 113 00:05:02,839 --> 00:05:06,000 Speaker 4: at their spreadsheets on park Ave in their you know, 114 00:05:06,040 --> 00:05:07,400 Speaker 4: in their tower saying this is. 115 00:05:07,400 --> 00:05:09,280 Speaker 2: An expensive bear story for Apple. 116 00:05:09,279 --> 00:05:11,640 Speaker 4: It all because to me, the bear story, it's valuation, 117 00:05:12,000 --> 00:05:14,960 Speaker 4: it's China, and I think at that point it's it's 118 00:05:14,960 --> 00:05:18,760 Speaker 4: a headwind, but it's more fictional Netflix story than reality. 119 00:05:18,880 --> 00:05:21,880 Speaker 4: That's going to hurt them. And then it's just more competition. 120 00:05:22,440 --> 00:05:24,920 Speaker 4: But it also it comes down to valuation. And that's 121 00:05:24,960 --> 00:05:28,120 Speaker 4: why this year I think the bears they focus so 122 00:05:28,240 --> 00:05:31,960 Speaker 4: much on valuation instead of the actual underlying growth story 123 00:05:31,960 --> 00:05:34,479 Speaker 4: that's happening. Not just Rapp but but we believe it's 124 00:05:34,520 --> 00:05:36,920 Speaker 4: the star of a new tech bullmarket for tech. 125 00:05:37,120 --> 00:05:39,000 Speaker 5: I mean, and this is this is your thesis for 126 00:05:39,160 --> 00:05:41,640 Speaker 5: next year, which is about I mean, twenty twenty three 127 00:05:41,760 --> 00:05:43,240 Speaker 5: was a year in which every time you saw an 128 00:05:43,240 --> 00:05:45,760 Speaker 5: AI story evolved Microsoft. 129 00:05:46,200 --> 00:05:47,920 Speaker 2: Wait we were talking about AI this year. 130 00:05:48,000 --> 00:05:53,640 Speaker 5: Wow, you didn't have a Yeah I know. Yeah, so 131 00:05:54,720 --> 00:05:57,200 Speaker 5: tempt to buy that pick rather than the treadmill. But 132 00:05:57,640 --> 00:05:59,560 Speaker 5: on a sidey more serious note, find and AI have 133 00:05:59,680 --> 00:06:02,800 Speaker 5: been the dominant forces as well as balance sheets in tech. 134 00:06:03,080 --> 00:06:07,080 Speaker 5: I put those three together and let's just put Apple aside. 135 00:06:06,600 --> 00:06:07,200 Speaker 1: For a moment. 136 00:06:07,520 --> 00:06:11,640 Speaker 5: Clyde An AI, how do I disaggregate. Who's going to 137 00:06:11,680 --> 00:06:14,440 Speaker 5: perform well in this what's going to make a cloud 138 00:06:15,080 --> 00:06:17,839 Speaker 5: A grade and an AIA grade stock? 139 00:06:18,040 --> 00:06:20,640 Speaker 4: Yeah, and I think you hit on And what's really 140 00:06:20,640 --> 00:06:23,160 Speaker 4: a key point if you look at what's happened when 141 00:06:23,160 --> 00:06:25,280 Speaker 4: the Dell and redman at the top of that mountain. 142 00:06:25,279 --> 00:06:28,800 Speaker 4: From a cloud perspective, now, this is more monization for 143 00:06:28,800 --> 00:06:32,440 Speaker 4: the hyperscale players from Microsoft, for Amazon, for Google. We 144 00:06:32,520 --> 00:06:35,120 Speaker 4: believe for every one hundred dollars of cloud spend the 145 00:06:35,240 --> 00:06:37,320 Speaker 4: last four or five years or is thirty five to 146 00:06:37,360 --> 00:06:40,880 Speaker 4: forty incremental AI spend. That's why I'd say when you 147 00:06:40,920 --> 00:06:43,840 Speaker 4: look at Microsoft, you look at Google, this is going 148 00:06:43,880 --> 00:06:45,680 Speaker 4: to be just a new frontier of growth. And then 149 00:06:45,680 --> 00:06:48,640 Speaker 4: of course you have the godfather of AI Gensen and Vidia. 150 00:06:49,080 --> 00:06:51,640 Speaker 4: This is really just starting what we've used in nineteen 151 00:06:51,720 --> 00:06:52,520 Speaker 4: ninety five moment. 152 00:06:52,600 --> 00:06:55,279 Speaker 2: It's called father of AI's. 153 00:06:56,040 --> 00:07:00,320 Speaker 4: Stock in sp Well, it's the biggest tech transformation thirty 154 00:07:00,400 --> 00:07:04,040 Speaker 4: years haven't seen since nineteen ninety five start of the Internet. 155 00:07:04,120 --> 00:07:07,599 Speaker 4: And we believe this is actually the beginning of the 156 00:07:07,640 --> 00:07:08,760 Speaker 4: next phase of this bull. 157 00:07:08,760 --> 00:07:10,200 Speaker 3: I just want to know, are there a million AI 158 00:07:10,480 --> 00:07:11,960 Speaker 3: ets that have all sudden come on? 159 00:07:12,000 --> 00:07:12,800 Speaker 2: You know, the exactly. 160 00:07:13,760 --> 00:07:17,240 Speaker 6: There's a few dozen that were launched way before we 161 00:07:17,280 --> 00:07:19,760 Speaker 6: started talking about AI around this time last year. But 162 00:07:20,000 --> 00:07:22,120 Speaker 6: I do want to switch gears here and talk about 163 00:07:22,240 --> 00:07:25,560 Speaker 6: EV demand because this has been one of the stories 164 00:07:25,600 --> 00:07:27,600 Speaker 6: that's really emerged. It just feels like all of these 165 00:07:27,640 --> 00:07:32,760 Speaker 6: automakers really miscalculated how much demand there would be for evs, 166 00:07:32,800 --> 00:07:34,360 Speaker 6: and now you're seeing those production. 167 00:07:34,040 --> 00:07:35,400 Speaker 2: Targets get cut. 168 00:07:35,760 --> 00:07:39,280 Speaker 6: How does that factor into how you're thinking about Tesla. 169 00:07:39,360 --> 00:07:42,320 Speaker 6: Is that a bear case for Tesla or does Tesla 170 00:07:42,520 --> 00:07:44,640 Speaker 6: just command more of maybe a shrinking pot. 171 00:07:44,880 --> 00:07:47,320 Speaker 4: Yeah, kat, I think that's a great point. Look, right now, 172 00:07:47,320 --> 00:07:50,320 Speaker 4: it's Tesla's world. Everyone else pan rent when it comes 173 00:07:50,360 --> 00:07:54,240 Speaker 4: to electric vehicles, and I think they're doubling down what 174 00:07:54,320 --> 00:07:57,080 Speaker 4: was happening Detroit, GM Ford actually peeling back a little 175 00:07:57,160 --> 00:08:00,920 Speaker 4: from electric vehicles. Some of the foreign automakers. Look, demand's 176 00:08:00,960 --> 00:08:04,640 Speaker 4: definitely softened, price wars have come through, but a lot 177 00:08:04,680 --> 00:08:08,640 Speaker 4: of those storms have now passed. I think for Tesla specifically, 178 00:08:09,280 --> 00:08:11,920 Speaker 4: unit volume looks strong. In China. I think there's going 179 00:08:11,960 --> 00:08:15,240 Speaker 4: to be a record quarter for China, you know, in 180 00:08:15,320 --> 00:08:18,000 Speaker 4: terms of Q four you go into next year, I 181 00:08:18,000 --> 00:08:21,400 Speaker 4: think demand actually starts to accelerate a bit relative to 182 00:08:21,400 --> 00:08:24,480 Speaker 4: where people thought. I think for the overall industry it's 183 00:08:24,480 --> 00:08:28,240 Speaker 4: still a massive transformation, but now you're starting to maybe 184 00:08:28,280 --> 00:08:30,240 Speaker 4: peel back a bit in terms of Okay, this is 185 00:08:30,280 --> 00:08:33,880 Speaker 4: not going to forty percent penetration. Maybe it's twenty five thirty. 186 00:08:33,840 --> 00:08:34,800 Speaker 2: Dan thirty seconds. 187 00:08:34,920 --> 00:08:37,320 Speaker 6: China is the rallying cry of the bears when it 188 00:08:37,360 --> 00:08:39,560 Speaker 6: comes to Apple, so too when it comes to Tesla. 189 00:08:39,559 --> 00:08:42,480 Speaker 6: You think about all those Chinese ev makers, How does 190 00:08:42,520 --> 00:08:44,360 Speaker 6: Tesla compete overseas? 191 00:08:45,280 --> 00:08:46,679 Speaker 4: They've done it. I mean I think a lot of 192 00:08:46,760 --> 00:08:49,800 Speaker 4: the price war it was. Look, this was a Pooker 193 00:08:50,360 --> 00:08:53,880 Speaker 4: move for the ages by must cut prices, focus on units. 194 00:08:54,240 --> 00:08:56,320 Speaker 4: And that's why right now this has been flex the 195 00:08:56,400 --> 00:09:00,000 Speaker 4: muscles in Beijing four, not just Tesla, but of course 196 00:09:00,240 --> 00:09:01,840 Speaker 4: for Apple despite bare noise. 197 00:09:02,720 --> 00:09:05,240 Speaker 3: You know, before we started, we showed a piece on drones, 198 00:09:05,920 --> 00:09:08,000 Speaker 3: just real quickly, twenty five seconds. Is there a drone 199 00:09:08,000 --> 00:09:10,680 Speaker 3: plane for drone play for you? I mean all of 200 00:09:10,720 --> 00:09:13,120 Speaker 3: the company, Amazon's in at Walmarts, everybody's in it. 201 00:09:13,160 --> 00:09:14,360 Speaker 2: Then there's individual startups. 202 00:09:14,480 --> 00:09:17,240 Speaker 4: Hey, look I think that's past. I remember being CS 203 00:09:17,400 --> 00:09:21,400 Speaker 4: years ago and fun. Yeah, I think that's Look, that's 204 00:09:21,400 --> 00:09:24,280 Speaker 4: why you have to separate is like, yes, yes, you 205 00:09:24,320 --> 00:09:28,040 Speaker 4: separate pipe from the reality. There's there's parts of that 206 00:09:28,120 --> 00:09:30,439 Speaker 4: market that are growth. Yeah, but you look at AI. 207 00:09:30,880 --> 00:09:33,920 Speaker 4: This is the super Bowl in terms of tech market. 208 00:09:34,679 --> 00:09:36,800 Speaker 2: We're gonna have a bold tech market in twenty twenty 209 00:09:36,840 --> 00:09:37,280 Speaker 2: five too. 210 00:09:37,840 --> 00:09:40,480 Speaker 4: Well, I think this bold tech market goes we leave 211 00:09:40,559 --> 00:09:43,559 Speaker 4: for another two years. That's why right now it's getting 212 00:09:43,600 --> 00:09:44,400 Speaker 4: the popcorn out. 213 00:09:45,520 --> 00:09:47,960 Speaker 2: That's a lot of popcorn, all right. Always fun to 214 00:09:47,960 --> 00:09:48,360 Speaker 2: talk with you. 215 00:09:48,360 --> 00:09:49,800 Speaker 4: Great, thanks for having so, I appreciate it. 216 00:09:49,800 --> 00:09:51,320 Speaker 2: Thanks for coming in this happy new year. 217 00:09:51,400 --> 00:09:51,480 Speaker 3: Dan. 218 00:09:51,559 --> 00:09:53,000 Speaker 2: I's of course of web Bush. 219 00:09:53,360 --> 00:09:55,200 Speaker 3: Check out his research and of course his calls on 220 00:09:55,240 --> 00:09:57,760 Speaker 3: things like Apple and just really the tech market overall.