Companies

Meta and Google are shifting their development focus away from Virtual Reality (VR) and Mixed Reality (MR) to ambient computing in the form of smart glasses given the potential that artificial intelligence adds to the form factor. I believe the annual market for smart glasses will reach hundreds of millions of units over the next decade, leading Apple to refocus its Spatial Computing initiatives to be more in line with Meta and Google wearables.

Apple reported another solid quarter, with sales growing by 5% year-over-year, marking an improvement from the 4% decline in March 2024. The September guidance suggests that growth will remain steady, which is a positive surprise given the potential impact of the Osborne Effect. More importantly, I continue to believe that the company will experience its strongest product cycle ever over the next two years, driven by Apple Intelligence that will lead upside to earnings.

Meta reported a slightly better than expected June quarter and raised September's y/y revenue growth target to 20%, up from the Street's previous expectation of 15%. Most importantly, Zuckerberg presented the company’s most compelling vision of how and when AI will transform the business. The bottom line is Meta remains one of the best positioned companies to benefit from AI over the next 3-5 years.

Tesla’s stock declined 12% on June earnings as profitability dipped and the timing of Robotaxi got pushed out by 6-12 months. Musk said it best when he boiled down the TSLA investment case to a simple question; Do you believe the company will deliver on the promise of autonomy? Our view is that potential is within reach, and by late 2027 we should start to see FSD adoption, and the fleet business begin to build. Beyond FSD, the company looks to add licensing of FSD to other car makers and scale Optimus, both of which will take 5-10 years to add to the bottom line.

We asked Gemini, ChatGPT, Claude, and Grok 15 questions about upcoming events to determine which models are most effective at looking into the future. This note is centered on “predictions” in the balance of 2024, which we’ll cover as they…

We tested ChatGPT, Gemini, Grok and Claude to determine which models provide the most clear and accurate responses. Our theory is not all foundation models are created equal. The two takeaways from our first benchmarking are: first, there is no single best model; certain models are better at handling specific queries. Second, there generally are two model "personalities"; with Grok as the only model with a distinct "personality". As for the what does this mean for search question: the answer is Google will win. What is most important for the future of ChatGPT, Grok, and Claude is their ability to allow third parties to create unique, deep, and conversational experiences that deliver insights beyond search. That doesn't exist today.

Apple made good on expectations, announcing generative AI integration across its software and applications. Accessing these features will require 85% of Apple users to upgrade some or all of their devices over the next few years. This means revenue growth in FY25 and FY26 will likely be +10%, ahead of the current 6% and 4% expectations, which should be a positive for AAPL.

While it's still more than two months away, I'm sharing my early predictions for the "Robotaxi Event". I expect three vehicles to be revealed, including Robotaxi, Model 2 and Cybervan (tailored to the ride-hailing vision). I expect initial production ramps could start as soon as summer of 2025, with FSD approval playing a large factor in the timing. These vehicles fit into Elon's vision that they need to solve autonomy to unlock shareholder value.

The most recent data coming out of China gives us a better picture of what is going on in Apple's China business. iPhone sales in Mainland China were likely down 5% y/y in Mar-24, better than Apple's reported 8% decline in Greater China. When Cook said iPhone grew in China in Mar-24, he was likely talking about units, not revenue. In other words, this means China's non-iPhone segment was down 12%, notably lower than the global average of Apple's non-iPhone revenue which was up 4% y/y.

Three of the four iPads got long awaited updates including thinner design, bigger screens, faster chips, and more memory. These changes will jump start the segment's growth in June and September after being down for 9 of the past 10 quarters. Looking into 2025, I expect the iPad to be on a steady decline of around 2% as the segment is impacted by the reality of infrequent upgrades. The big surprise announcement was the pace that Apple is introducing new chips, a sign that the company will use hardware as a competitive advantage once they get more into the AI race.

Shares of $AAPL traded up 6% following March results as investors were relieved that the company maintained Street revenue guidance along with an increased share buyback. The next seven months will likely show Apple's business accelerating every quarter from down 4% y/y in Mar-24 to up 6% in Dec-24. More importantly, the company reiterated their optimism that they will bring generative AI to most of their products, likely starting in the Fall. Bottom line: Apple's business is intact, revenue growth is improving, and the company is pursuing generative AI to further boost sales.

Shares of Meta traded down 11% on the March quarter guidance that the company is entering into a multi-year investment cycle starting with AI capex in 2024 tracking to be 12% higher than previous expectations. We believe investors are missing the point. Meta has a golden opportunity in the next decade to leverage its data and build AI tools and products for billions of users, advertisers, and businesses.