Dillon Valdez
Growth Investor, Public Portfolio Journal
Apple faces new competition from OpenAI in consumer hardware, whether Apple likes it or not, which is bearish for the stock. As @SawyerMerritt reports, Apple has sued OpenAI for trade secret theft. Apple alleges that employees who left for OpenAI took confidential information about its unreleased technologies and products to help develop OpenAI's own hardware. x.com
AI's threat to incumbent tech makes SpaceX the preferred investment for the next decade. AI has begun taking business from Google, with Amazon and Apple next; Microsoft's 27% workforce reduction program signals desperation. x.com
Microsoft is this generation's IBM and will bleed market cap and cloud share through over-reliance on an AI lab that is, rightly, not loyal to it. Apple at least has a hardware and consumer ecosystem edge while it sits this wave out. x.com
Apple's distribution will put its own or a partner's AI agent at the top of the market. x.com
Apple's roughly 35x forward earnings premium looks unsustainable. If fear around the AI trade fades, its gains could stall or reverse. x.com x.com
Apple is a sell here because buybacks are replacing innovation while its share price is dangerously extended. It is not spending on AI, in cloud services, making robots or pursuing global WiFi; its VR, Siri chatbot and iCar efforts have failed. Its flip phone follows Samsung's, and AirPods have poor battery life and microphones. The share price has held up, but only for now. x.com
Apple is the obvious flight to safety in US markets because it wins on access to cheap memory and on open-source AI. x.com
Apple lags on AI and suffers from AI-driven cost shocks to components such as memory and storage. x.com
Apple's valuation pays too hefty a premium for its expected long-term earnings growth. Its forward P/E-to-growth ratio is 2.58; even if the market sees its hardware moat and ability to exploit others' AI investments despite underinvesting itself as a winning strategy, that premium is too high. x.com
Apple may not need to develop AI at all if its lawsuit against OpenAI lets it effectively own OpenAI over alleged IP theft. The suit claims OpenAI's hardware drive is built on Apple IP, which is enough to turn the stock around: after a nasty selloff and surprising reversal, it has made a Darvas Box breakout, albeit on low volume. x.com x.com
Apple has trapped itself: after years of unnecessary price hikes while lagging in AI, it cannot raise prices now that memory costs require it without losing consumers. Its reported turn to CXMT memory hurts Apple, not memory makers, because CXMT physically cannot meet demand and using it could backfire on Apple's quality control. It instead strengthens the case for the big three memory makers, especially Micron. Without AI gains, loyal customers may start looking for alternatives. x.com x.com … Show more