But you're going to boil it down to the like the thing that I saw. Not that thick. And separately and importantly that the seam, that crease, it's almost impossible to see it if you have it a certain way you can barely make it out. And what that means is that you like this is a device that doesn't feel like a foldable. It feels like just two different phones that you have at once. People are going to consider this. Which is a big difference. And I think if you're going to play it forward right now, it's that I think this is probably going to account for 5% of Apple's revenue in fiscal '27. I think before, if you're going to ask me I would say it's between two and two and a half. So I think it's kind of a double what it is. Now it's not This is not game-changing in the sense of it's going to add 30% to revenue, but it definitely is in the positive category when it comes to revenue and that's what stuck out.
Welcome to the Risk Reversal podcast. I'm Dan Nathan and that is Gene Munster returning to the podcast. He is the managing partner at Deepwater Asset Management. Gene, welcome back to the podcast.
All right, but you know, you and I have done this I want to say maybe 15 times. We probably done Fast Money together maybe 100 times. I don't know, maybe maybe more over the years and I don't know why every time with you, man, I just get my radio voice on. But maybe that's just getting us all geeked up a little bit here. You and I had a lot to talk about. I don't think we spoke right after earning season. I can't really remember and it felt like this tech earning season went on and on and on. I mean it feels like tonight after the close, we're recording this on Thursday, we have Oracle. I think we all have also have Adobe, correct? So, you know, like kind of the tag ends a little bit of the software you know, that we've seen over the last few weeks or so. But I want to talk Apple Duo. This is the new foldable phone. I want to talk about Meta Muse, which Meta Muse that is like Metamucil. That that's not a great news. I mean they didn't they didn't give that too much thought there, did they? But you know, to me as someone who's not a big Meta fan, I find that really intriguing and and we'll talk it through personal agents and the like. I don't know about you. I've been using this Instinct for the last few weeks. I think that's really interesting there. Gemini Dream Beans, have you tried this thing? It's freaking cool. All right, that's pretty cool. I want to talk about Tesla Cybercab and what it means for Uber. And then maybe 10% chance we're all going to die because of because of AI. So, we'll finish off with that a really positive note. All right, Jean, we got to do Apple. It really was the dual event, right? I know that you were watching every minute. You were live tweeting and that sort of thing. We're on Fast Money together last night. You and I have gone back and forth for many, many years. Me from a qualitative standpoint, you from obviously a quantitative standpoint. I asked you one question last night after I gave you my view on what I could see about the phone and what I thought about the phone. This is somebody who's had 15 iPhones, 10 iMacs, you know, every product they I said not me, not for me. I think it's going to be kind of like one of those douchey things when people pull out they're going to get any of it made fun of and I'm a virgin two or three guy, okay? You, I said to you, you're buying the stock for this thing. You said yes. All right, the stock's up 3% in a down day. Good on you. You're you're you were really obviously you've always had your finger on the pulse of the way the stock moves. Help me think about what you saw the phone, what it says to you about the road map, and as an analyst putting your analyst cap on, what do you think the opportunity could be in the near term?
So, what I saw was a market that's a niche market today, probably a couple percent of overall smartphones are foldable phones. They've been around for 5 years. Samsung, Google are the two players. What I saw was a foldable device that I think that people who are thinking about that category would be open to. And before the event, I thought it was going to be a me-too type of a foldable, that there's no real reason to be spending $2,000. And so, what changed was I mean, if I you're going to boil it down to the like the thing that I saw is the thickness of it. It's heavier than you think, but the thickness of it is 14% thicker. Now, this is when it's closed than the iPhone Pro Max at the thin point. There's a bump out around the camera, so if you look at kind of the main chassis part, so it's not that thick. And separately and importantly, that the seam, that crease, it's almost impossible to see it. If if you have it a certain light, you can barely make it out. And what that means is that you know, this is a device that doesn't feel like a foldable. It feels like just two different phones that you have at once. And so, where where I kind of all put it together is I went in thinking no one's going to want this, and I left feeling people are going to consider this, which is a big difference. And I think if you're going to play it forward right now, it's that I think this is probably going to account for 5% of Apple's revenue in fiscal '27. I think before, if you're going to ask me, I would say it's between two and two and a half. So, I think it's kind of double what it is. Now, it's not This is not game-changing in the sense of it's going to add 30% to revenue, but it definitely is in the positive category when it comes to revenue, and that's what stuck out.
All right. So, you and I talked about this offline, but I I'd love for you to kind of walk me through it a little bit. There's 30-some analysts that changed their num- There's probably what, 70 analysts who cover the stock on the street or something like that. 30 of them changed their numbers, but what was your takeaway by the numbers changed? Because you don't always see a lot of analyst activity after one of their hardware events, right? Am I right or no? I mean, like it it seems like, you know, the the
Usually not. Okay, the the the specific numbers that I'm looking at right now, there's 38 analysts that are covering right now, at least they're kind of actively in the fact set. And the numbers for the December, March and June quarters. So, if you look at the absolute revenue, it shifted Some of it shifted from December because they split the cycle. They're doing those the 18 18E and Air in the spring. Some of the revenue shifted from December, so people were moving their numbers around. December growth went from like 11% down to six, and then March went from like 12 to 18 or something like that. So, there was movement in the numbers. Not all 38 of them changed their numbers. Typically, about half of them do. But, the what you can see is that whatever the trend is, it understates where it's going because only half of the people have made the changes. So, what that means but the the the real takeaway here is the part that surprised me in looking at the numbers is that the absolute number the absolute dollars actually went down by 1% for the analysts that changed their estimates. So, when I saw the device, my reaction was this is going to appeal to a market. I Before I thought it was really a rounding error. It was just a kind of a flex type of a product. But, the analysts, their view is that this probably isn't going to have an impact. The version one really isn't going to have an impact. So, when we think about like the debate, at least the analysts that have changed their estimates so far are more in your camp, much more in your camp than my camp in terms of how this plays out. Now, what does that mean? Why is the stock up on that? I think that there are investors that are having a different view than what the analysts are.
Anything else from that event that stuck out to you cuz, you know, again, this is something that to me it it seemed like that was the main event, but I
I didn't think it was going to be. We knew it was coming. I thought it was going to be this rounding error, but I mean, again, that you know, the the thickness of it, the screen, it's just much better. I mean, it had this animation that's you know, I feel like I'm talking to you like trying to sell Apple products here, but when you open it up, there's this animation looks like you're looking through it. It's just really unique. Again, we'll we'll we'll we'll see. That piece stuck out. The other piece that stuck out on the negative side was around what's going on with the new Siri, which is code name for their Apple intelligence, which is code name for does Apple have AI chops. They put up the slide that says, the new Siri's in beta in English now, and that's kind of a no kidding, Sherlock comment because it went out in beta in July. And then, it's going to be available in beta in five other languages in October, but that's this language is in the US. So, Spanish, Portuguese, Korean, Japanese, and one other one in the US. And then it had a footnote on there that was really small that said excludes EU and China. And so, like one of the things I want to figure out is like when are they really going to get this so it's like a prime time, not a beta product that they're willing to really stand behind and put the Apple brand behind what they're doing with the new Siri. And as far as yesterday, we didn't get any updates on that. I think that's part of the reason why the stock sold off during the day and then when people kind of got more time with Duo, it started to move higher.
Yeah, you know, the funny thing and we could just end with Duo here. I you know, again, I like your enthusiasm about it and you've had a great sense for, you know, kind of when this company was signaling and what the road map was likely to be and, you know, a lot of folks didn't think the the big phone when they went and did it like what, 10 years ago or something like that. And it ended up taking up like a lot of it was just a almost a new category for all intents and purposes. And that's probably what goes on with Duo. You know, this is just sticks out to me. You know, for 19 years they've convinced us that you need to have a piece of rubber on this beautiful piece of metal and glass, right? And they've been selling for 30 bucks, you know, those little pieces of plastic that you put on the front of it. Okay. Well, three of the four surfaces of this device are glass. You know what I mean? Like so when I think about this, how are you going to cover this thing? Like are they going to have huge breaking issues? You know, you do have this kind of, you know, like thing now that mechanism that moves it all of a sudden. So, you're not going to have the rubber on it. You're not going to have the glass thing on it. It doesn't really fit in your pocket. It looks like it could just go into a million pieces if you dropped it onto a slate floor or something like that. So, again, I know that that's
Yeah, I'll I'll I'll I'll put one piece on this. I'm sorry about interrupting, but the the there's precedence here. And I don't know like what the case is going to look like, but I know that they've given that a lot of thought about how it work. And the reason why is we go back to antennagate. I don't know if you remember antennagate.
And they sold you that little rubber thing that went around, right? Like
They They might have even given it away to you.
uh for you know, that 98% margin product. But the point was what they learned from there, what the the learning was that how essentially what happened was the way you held the phone, it caused the antenna kind of short-circuit out.
The the electrical energy.
holding it like that, yeah.
And um but my my point is is like that was a big deal. I remember Jobs was vacationing in in in Japan. I just loved that. That was like his vacation spot. And then he comes back to He was just pissed. He was frustrated about everybody making a big deal out of this. Um but what it was a learning. I mean, culturally, it was a learning that they need to think about these kind of downstream effects. And they also had it with the scratching of the screen. That was
nothing else, your keys in your pocket. And they don't make those mistakes anymore. And I think that when it comes to the case that's a point that I had not thought about, but I can tell you from a design standpoint, they think about that piece. And a lot of these are going to be bought on their Apple upgrade program, which comes with insurance on them. And so they don't want to be under writing
not an engineer, Jean, but I look at that device and I look at all the screens and I'm like, I don't know how you can put a case on it. I just don't know either. It's probably impossible. Maybe we're going to have to hit you know, Gemini or or one of those things. You know, distribution for AI capabilities, you know, Apple pretty well situated here. 2 billion, you know, iOS devices, right, out there in the world. So when you let's just put AI, Siri, intelligence, all that stuff on the side cuz we don't know what's going to happen here. When you see an announcement by Meta, which is yet to monetize WhatsApp, right? We just haven't really given a lot of thought to how they might do that. There's been a lot of thought, but there hasn't been anything demonstrated. We know on the model front, you know, it's something where they've lagged behind to some degree. One of the latest models came out and it was showing sort of better performance, that sort of thing. When you see Muse and you hear about how it's going to work within their sort of platform, what do you think? Have you messed around with it yet? Is it out there in the wild? Because I've been using this Instinct for last few weeks and I think it's really cool.
