Apple's shiny surprise
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In today’s edition:
- Apple becomes a hyperscaler hedge
- AI companies love paying influencers
- The 10 most-expensed restaurants
Apple’s new era begins with an old advantage as it splits from tech peers
New phone, new boss, same core: This month, John Ternus became Apple CEO, succeeding longtime leader Tim Cook. Ternus, who previously led Apple’s hardware engineering, is expected to kick off a historic period of new device releases, starting with Apple’s “Surprise and Shine” event today:
- Apple is expected to launch several new gadgets — possibly even the rumored foldable iPhone and AirPods 5 (though probably not with cameras).
Hey Siri, what’s not new? If Siri responds with “I didn’t get that,” there’s your answer:
AI is still not the apple of Apple’s eye. While Microsoft, Alphabet, Amazon, and Meta are expected to spend more than $700B in combined capex this year (up from about $400B last year), Apple has largely stayed out of the AI splurging cycle. Last fiscal year it had less than $13B in capex.
Despite being behind its peers on AI, Apple’s outperforming by many metrics. That’s not entirely surprising, considering that 2.5B Apple devices are being used around the world. AI or no AI, it has an unparalleled hardware moat and distribution advantage.
- Apple posted record revenue and EPS for the June quarter, with $109B in revenue (about half of that came from iPhone sales, which were up 22%).
- In July, Apple briefly surpassed Nvidia as the world’s most valuable company and hit a $5T market cap for the first time.
- While peers are seeing their free cash flows shrink (Alphabet and Amazon even went free cash flow negative), Apple’s FCF surged to $32B.
Instead of making large AI spending commitments, Apple has taken the partnership route, striking integration deals with big players. In January, Apple announced a multi-year partnership with Google under which next-gen Apple Foundation Models (which power Apple Intelligence features) will be based on Google's Gemini models.
The biggest direct threat to Apple right now isn’t AI; it’s the massive memory-chip shortage that AI has spurred. In June, Apple announced it was raising device prices because of the memory crunch, which Tim Cook called a “hundred-year flood.”
The bottom line:
Apple is becoming a hyperscaler hedge. Whether its reticence to go full steam ahead on AI ends up being a blessing or a curse, investors are starting to see Apple as a hedge to its AI-heavy peers. According to a new CNBC analysis, Apple stock hasn’t been this inversely correlated to its Nasdaq-100 peers since 2005. At times when investors grow worried over surging capex and debt obligations in the AI trade, Apple typically doesn’t sell off with them. But at times of AI optimism, it could lose out.
New research from Ramp Economics Lab
Ramp data shows that business spend on influencer marketing has increased 3.75x since 2023, when it was around 0.4% of a company’s overall marketing budget.
Today, it’s around 1.5% across all businesses, but for AI and software companies, it’s 2.4%, with most of the increase taking place over the last nine months.
In fact, the AI industry’s emphasis on influencer marketing puts it second only to consumer brands in creator spend: consumer brands drive 43% of spend on influencer marketing, while AI and software companies drive 28%.
Read more from Ramp’s lead economist.
The 10 most-expensed restaurants on trips
Traveling employees need their nourishment. Using Ramp transaction data, we tallied up the 10 most frequently expensed restaurant chains during business trips.
Can you guess the #1?
Signals Shortlist
- LIV Golf files for Chapter 11 bankruptcy protection (CNBC)
- Meta launches a personal AI agent designed to be easy to use (Wall Street Journal)
- China’s car sales fall 24% as BYD, Tesla seek reprieve abroad (Bloomberg)
- Canada slaps retaliatory tariffs of up to 50% on $20B in U.S. goods (Yahoo Finance)
- Robinhood strikes deal with Crypto.com in latest prediction-markets push (Wall Street Journal)
- Consumers more worried about personal finances and jobs (Reuters)
🗓️ Leading Events:
Wednesday, September 9: Apple “Surprise and Shine” special event. Earnings expected from Chewy, Casey’s General Stores, Navan, AeroVironment, and Wealthfront
Thursday, September 10: Producer Price Index. Earnings expected from Oracle, Adobe, and Macy’s
Friday, September 11: Consumer Price Index. Earnings expected from Kroger
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