Apple’s (NASDAQ: AAPL) stock is up 108% in the last five years. The S&P is 69% over the same period. It should surprise most people that Amazon (NASDAQ: AMZN | AMZN Price Prediction) is up only 35% over the same period, given that it is driven by its AWS business and its early foothold in AI. Meta’s (NASDAQ: META) stock is up 111% over the same period. What happened to the world’s largest social network and its early beachhead in AI? What about Microsoft (NASDAQ MSFT), which has performed only as well as the market over the last five years, despite its strength in the cloud business and its early AI move? What about Tesla (NASDAQ: TSLA), which is up 79%?
What about them?
What about the fact that Apple has the second-largest market cap of any public company at $3.8 trillion, behind Nvidia’s $4.4 trillion. Apple’s is slightly higher than Alphabet’s (NASDAQ: GOOG), and it controls the global search business. It started controlling US streaming, and it is another early company at the leading edge of AI development.
The answer, in a word, is “iPhone,” which by many measures is an old consumer electronics product. The current generation of the iPhone is 17. Five years ago, it was the iPhone 14. Over the entire period, people have continued upgrading, even though the core features have remained the same.
And, if anything, the iPhone has become more important to Apple. In the most recent quarter, iPhone sales accounted for $85 billion, or 60% of Apple’s revenue. And iPhone revenue was up 23% year over year. Total revenue for the period rose only 16% to $143.8 billion.
Apple does not have an AI product, and the market has been waiting for one since September. Apple was “weak” to have to turn to Alphabet’s Gemini. Of course, Apple is avoiding the hundreds of billions of dollars that other megatech companies are investing in AI development and massive data centers.
When it comes right down to it, are investors betting on an old hardware product or the expensive future of AI?
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