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The Exchange
The Exchange 9/9/25
00:42:52
Listen to the day's top stories, the must reads & a whole lot more for today's modern investor.
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- [00:00]
Melissa Lee
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- [01:02]
Christina Parts
You're listening to the Exchange.
- [01:04]
Gene Munster
Here's today's show.
- [01:06]
Melissa Lee
Welcome to the Exchange. I'm Melissa Lee alongside Mike Santoli and you're looking at the stock of the hour as the event of the hour is just moments away. Apple unveiling the first major redesign of the iPhone in half a decade. We'll bring you the headlines and the investor reaction.
- [01:20]
Mike Santoli
Meanwhile, stocks are a little changed right now despite the big job growth revision number. Nonfarm payrolls prior to March 2025 showed a drop of 911,000 from the initial estimates. The Nasdaq did hit an all time high earlier. Meanwhile bonds, they're mostly holding steady ahead of tomorrow's key Inflation Report 10 year yield and the 2 year yield dollar up slightly off of those recent multi month lows.
- [01:45]
Melissa Lee
And we see gold continuing higher heading yet another record today holding above the 3600 mark and the dollar trending slightly higher after hitting the lowest level since July earlier in the session.
- [01:56]
Mike Santoli
All right, we begin with the big event of the day. Apple holding its highly anticipated product event today that it is calling all dropping. Let's get straight out to Cupertino and Steve Kovac with what we can expect. Steve.
- [02:10]
Steve Kovach
Hey there Mike. Yeah, the event just got started. I heard Tim Cook in that building behind me, the Steve Jobs theater. Welcome all the guests in that theater to this new iPhone event. It's just getting started but let me tell you what to look for. What we're expecting obviously as Melissa teased is this new design, this thin version of the iPhone. The Internet keeps calling it the iPhone Air. We'll see what it actually is called here in a few minutes. But this is going to be the first major redesign from Apple on the iPhone since 2020. And I've been looking at this the last couple of months. You can see how new designs actually drive growth in the iPhone better than what we saw last year, which was Apple intelligence, which kind of failed to impress people and also failed to drive that super cycle so many of the Apple bulls thought was going to happen. In fact, sales fell in that first quarter of iPhone 16 sales, at least on a revenue basis. So there's that. And then on top of things, what else can help Apple get back to growth in iPhone is increasing the prices. So the street has been talking about this for the last few weeks, kind of doing some back of the envelope math as to whether or not we'll see the first major price increase since 2020 on the iPhone. We'll want to see if the base model goes up as well as those pro models, which people are already spending a lot more for. On top of that, of course, AirPods and a new watch also on the docket. But everyone's going to be paying attention to the iPhone, guys. We should have all those details any minute now.
- [03:37]
Melissa Lee
It'll be an interesting trade off though, to watch. Steve in terms of people who choose the iPhone Air, as it's known, they're giving up on the battery life, certainly, as well as the camera, potentially.
- [03:49]
Steve Kovach
Yeah, that's potentially. We'll be listening to what they say about that. But at the same time, Melissa, you got to keep in mind they're also going to be using likely new components in this. They're not going to be using the modem from Qualcomm. They're going to be using their own modem that they used after that acquisition of Intel's modem business several years ago. That should help with power management a little bit better than using third party technology. And that's part of the reason why we've seen Apple make these shifts to get rid of third party technology, because they can manage things like battery life so much better. So we'll see what that looks like. But by the way, it'll probably still last a full day. So I doubt Apple is going to sell you a phone that just lasts a couple of hours. Mel.
- [04:29]
Mike Santoli
Well, and Steve, is there a consensus that has come together about what we might see on pricing?
- [04:36]
Steve Kovach
No, not at all. And here's one thing you should be looking up for. Mike. They do these kind of what I call sneaky price increases where they take the storage. You know, however many gigabytes of storage you get, they'll increase that on the base model and increase the price. They make it kind of seem like you're getting a value out of that when really the margins on their storage chips are really high. So that's one way they can do it. Another thing that people have come to the consensus on, you won't hear the word tariff mentioned at this event today, even though that is likely going to play a factor into any price increase we see.
- [05:11]
Mike Santoli
You won't hear it because they don't really want to put some focus on the price impact or because they feel like it's not material.
- [05:19]
Steve Kovach
Or. No, the political pressure, we've seen the enormous pressure from the. The President on Tim Cook. Tim Cook had to go to the Oval Office and present him with that golden trophy in order to get some tariff relief. And the last thing I think Apple would want to do right now is poke the bear, so to speak, and encourage the President to maybe threaten more tariffs on this company, which has been such a weight on the stock since the beginning of the year since President took office.
- [05:45]
Melissa Lee
It wasn't just golden. I mean, it was solid gold. It was a hunk of gold that he had. 24 exactly. All right, Steve is posted on the event. Steve Kovac and Cupertino. Meantime, let's get to Gene Munster, Managing partner, Deepwater Asset Management. He's with us for the hour. So, you know, Apple's behind in terms of performance amongst the MAG7. Is this going to reset Apple?
- [06:08]
Gene Munster
I think it does, Melissa and I think Steve outlined it perfectly about what the key points are today. But at the end of the day, the key point is what is growth going to be in the December quarter. The street's looking for 7%. It was 5% just a couple of weeks ago, now it's 7. I think that's probably closer to 10. And for fiscal 26, the streets have 5% iPhone growth. I think it's probably closer to 7 to 10%. So that's what it comes down to. Melissa, today has been obviously well framed in, but the key is going to be what the follow through here. And I just want to add one other piece that is really probably more important in terms of iPhone growth for the next year. That the stock is going to go relative to the iPhone growth, at least for the next couple quarters is something that is so mundane, which is this upgrade pool and if you would go back and play the tape and say what I was saying a year ago, I would have said Apple intelligence is going to have a big impact. I was wrong on that. And second is that we'd start to see the fruits of this 2021 upgrade pool that was up 39% that year, fiscal 21. And so this year we started to see that. I've been correct on that. We saw it in the March quarter, iPhone growth was 3,4%. It was adjusting for tariffs in the June quarter up 11%. And so that compares to basically flattish for the past couple of years. So the big picture here is people are committed, they're loyal to the iPhone. There's no question about that. What's ultimately going to happen is they're going to have some new phones here. People are going to be relieved that now they can purchase with some confidence that they have the latest and greatest. And I think that that's going to yield higher numbers. And so when you put all this together, my confidence that Apple is going to exceed estimates over the next year is high. And I think that that probably is going to put it at the top of the Mag 7 for the balance of the year.
- [07:57]
Melissa Lee
All right. You know, not everybody thinks this iPhone is going to be a big deal. In fact, AT&T CEO John Stanley Staley spoke to CNBC's Morgan Brennan from the Goldman Sachs communicopia and technology conference about today's event.
- [08:11]
Mike Santoli
It's obviously important to a large portion of our customer base that use those devices. So we do watch it closely and you know, we've obviously worked with Apple for is a partner in distributing their equipment. I'm not expecting it's going to be anything what I would call earth shattering or frame breaking. But every time you're not anticipating a super cycle, I'm not anticipating the infamous super cycle. But who knows, the customer will ultimately decide that.
- [08:38]
Melissa Lee
I think your point, Gene, is that it doesn't need the super cycle at this point. Right? I mean that there's a whole bunch of people out there with old iPhones who just need to upgrade anyway. Is that what is priced in the stock and anything else is just sort of gravy?
- [08:51]
Gene Munster
Well, I think what's priced in is by where the street estimates are is kind of that call it 5, 6% iPhone growth for next year. And if this super cycle, I would consider a super cycle 15% plus growth. And so I agree we're not going to have a super cycle. But I also have high confidence that we should exceed the estimates. One other piece to it, I talked about that pool. That's really important. I mean this is like clockwork. They have over a billion active iPhones. So the modeling, this actually is relatively easy when you look at what's happened over the past 15 years. And so we're going to get that bump. I think the other X factor of course is what happens with the new form factor. Steve talked about that, how long it's been since there's been a new form factor. There's the pricing piece I absolutely agree with Steve is that they won't do it upfront but it'll be kind of in terms of how some of the memory capacity is priced. But these levers I think ultimately are going to yield what investors need, which is iPhone upside and comfortable iPhone growth. We haven't had that for three years. So based on my expectations, I think we're going to have probably the best year this year in four years for Apple. And then you layer on top of that, I mean that's, we're talking a lot about the phones today and that makes sense but you layer on top of that, fast forward the conversation to March of next year and the bar is really high for the new Siri. But if they deliver, if they deliver on that, which their history is that they deliver, if they deliver on that, I think you're going to see an AI bump that hasn't happened. Importantly, all the talk of AI, there still is no consumer device that really has captured the attention around AI. So this is still a greenfield. Next year will be plenty of time for Apple to get in there. And I think once you start layering on an Apple intelligence part of the story, I think it gets even more exciting. Looking into the back half of 26.
- [10:42]
Mike Santoli
Gene, I wonder to what degree this comeback that we've seen in Apple shares and it hasn't really traded above this level yet either in price or valuation for very much of the last 15 years. You know, if it is in some sense the market coming around to this idea that there is upside optionality if they manage to catch the wave correctly and maybe you get the upgrade boost a little bit here. So I guess the question is at 30 times earnings how much of what you're suggesting may already be accounted for.
- [11:13]
Gene Munster
So the simple answer is I don't think it's fully accounted for. If I was going to look at how this plays out. Fast forward a year from now we're going to be talking about the 20, fiscal 27 numbers and that's probably about $9. I do believe we'll get multiple expansion based on what is going to be improved expectations about revenue growth. I think that's part of what has helped the stock more recently is just more optimism. So I have a 35 multiple on that $9. I'm more like a 315 price target over, over the next, the next year or so. So I think that the simple answer is that it's been really easy to be negative on Apple. The storyline is pretty well worn is that the tariff impacts, they're sl AI. But I think it misses what is fundamental is that there are a lot of people, call it 1.5 billion people that depend on these devices and they're willing to pay more. Just leave it with one fun fact. $100 increase in the ASP of an iPhone cost the average iPhone users $2 a month. I mean they've got pricing leverage now. Whether they're going to exercise it today remains to be seen in that climb.
- [12:17]
Melissa Lee
To 35 the multiple that is. Gene, where do you anticipate China to be? Because a longer Apple takes to get its offering right, the more market share it seeds to some of its Chinese competitors which already have AI offerings.
- [12:31]
Gene Munster
They got to get China right. That's been a missing piece obviously around Apple intelligence. They're working with Alibaba, they're working with Baidu there. They're not going to make any announcements today on that front just who's going to be the underlying model for Apple intelligence in China. But they got to get that right. That is a market where there's been more excitement around consumers and AI with a phone. And so to answer your question, at the most basic level, is China improved last quarter? Been down double digits for a few quarters, saw some improvement and for me that in my model that's where you see incremental upside. If in fact they can get China to grow at that 5 to 10%. If I'm wrong and it drifts back to down 15% which we have seen recently, then my upside. So it is an important piece about how China plays out. Call it 15% of total revenue, but it has a big swing factor.
- [13:26]
Mike Santoli
And Jay, just to drill into your point about how the upgrade cycle is pretty easy to model given the size of the install base. It just reminds me a little bit of hearing for a decade that the average age of cars on the road has never been higher and it's just all this pent up demand to get a new one. But guess what? The old cars don't wear out like they used to and the new ones aren't that much better for the price. So I just wonder if there's anything going on in, in terms of people hanging onto their phones longer because they're not compelled to switch.
- [13:55]
Gene Munster
Definitely saw that that was a trend from 2015 to 2019 in that area. Essentially there just wasn't that punch in the, and the features. And if you play it forward here, there's a big unanswered question about how AI ultimately improves these devices. They're going to need the most advanced hardware to power this new Siri. My, my takeaway is that if they deliver this is going to be lights out good. I think what they have the potential here is to bring to the masses that I think will cause a contraction, will, will shorten the time frame. I think that will pull forward people from that four year upgrade cycle. So there is a carrot out there and the carrot is how does AI impact the utility of these devices?
- [14:39]
Mike Santoli
Yeah. And I guess we've seen consumers don't exactly know what they want until they see it in front of them and then maybe they act. Gene, you'll be with us throughout the whole hour. Let's you know, we'll be sure to talk to you more about this later in the show. All right, coming up, Apple shares more than 1600%. Since Tim Cook became CEO in August of 2011, he has overseen a lot of product launches. But what will be Apple's next phase? That's ahead.
- [15:05]
Melissa Lee
Plus, what impact will today's event have on Apple's manufacturing partners? Names like Corning, Applied Materials and globalfoundries. Heavily reliant on the iPhone maker, we'll take a deep dive into Apple's ecosystem. The exchange is back right after this.
- [15:19]
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- [15:49]
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- [16:05]
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- [16:37]
Mike Santoli
Welcome back. The Apple event is underway with Apple revealing the first major redesign in half a decade. Our next guest says Hua Kook Cook has delivered operational excellence. The next phase needs Jobs ask vision. Let's bring in Low Tony, founding managing partner at Plexo Capital. He is also a CNBC contributor. Low, great to have you here.
- [16:56]
Low Tony
Thanks.
- [16:57]
Mike Santoli
Sounds like a pretty high bar to be Jobs. Ask what, what exactly do you think that entails?
- [17:02]
Low Tony
Well, I think when we look historically, Jobs was a radical innovator. The ability to be able to set the stage for what has become table stakes for smartphones, no keys and having a big screen, the ability to integrate all the different apps, I mean that was really setting the stage. Now for Tim Cook, he was the right place, the right time because he has been able to do flawless execution. Right. So Jobs was magic and then Cook is execution. But now the question that I think a lot of analysts have, especially after looking at the AI launch last year, is does Apple need to return to a more product focused desire so that they can have the radical new experiences that Jobs was known for delivering?
- [17:50]
Melissa Lee
I think some analysts would have argued that Apple needed that earlier in Tim Cook's tenure. It's not that easy to have Jobs esque vision, otherwise they would have had Jobs esque vision a couple of cycles ago. So how does, how does the execution guy, Tim Cook all of a sudden flip the switch and say, you know what, we're going to have vision now, we're going to deliver products.
- [18:10]
Low Tony
Yeah, it's tough and like I said, it's a high bar. Right?
- [18:12]
Melissa Lee
Yeah.
- [18:12]
Low Tony
And so I think what we look at is we look at the ability to be able to leverage the team and to be able to. I think the AI piece is going to be very important because I don't know if it's going to have the ability to have a hardware driven super cycle again. I think what we're going to need to see is integration of a killer software app and I think AI might be that. Now what the analysts don't want is for this to be a Siri 2.0 because if you think about Siri, that was Apple's first foray into AI and they led with that. But then the iteration, the innovation cycle stopped on Siri, and then Google and Amazon, I think, really outpaced them. So I think what we'll need to see on the AI front is integration into that new hardware that gives us something magical. And that's probably not limited to just generative AI, is probably agentic AI. The ability to actually take a task and go out multiple steps to have that complete for you, that's magic.
- [19:13]
Mike Santoli
I mean, I guess the question is, do they need to build whatever that capacity is from the ground up, or can they have some kind of faith that those devices are going to be the conduit for whatever third party or first party, you know, apps or services are going to deliver that sort of thing?
- [19:29]
Low Tony
And, you know, it's a great point because what Apple has been known for, to be able to create these magical experiences is the ability to do that through vertical integration. So having ownership of both the hardware component and the software component in this case. And I think that's the question, and there's been talk, should Apple acquire their way into a more AI experience that's really going to give consumers something different. So that's kind of been the talk around, you know, Silicon Valley is, you know, is Apple sniffing around and looking at some of these app companies within the AI tech stack?
- [20:07]
Melissa Lee
How critical do you think this juncture is for Apple considering that, you know, OpenAI, for instance, they're looking to create some sort of a device for AI, that there are going to be other competitors that we may not even think of who are in the AI game firmly right now, but want to be in the hardware game. Where can we see the competition? And do you think there is a chance that Apple could lose its mantle? And I know that, you know, that's almost like blasphemy to say, but I mean, we said that about BlackBerry and people thought, you know, BlackBerry would have been around forever and where is it now? Not in our hands, that's for sure.
- [20:39]
Low Tony
And that's the perfect analogy. BlackBerry. Right. So when you look at that leadership they had and then they lost it, and it was because of the radical innovation at the time of the iPhone. And so I think that's really the question. And we're going to see more and more competition. We're going to see the competitors getting better and more savvy. They're already leading in some instances with foldable smartphones. So Apple's lagging But Apple has been known to come back and come back quickly, so we won't count them out.
- [21:06]
Mike Santoli
It's funny, we can sort of talk around this with this general notion that there is something magical that's waiting to be discovered or delivered. Do you have any sense of how it might, how it actually might manifest? I mean, you know, you see these ads I think Google's running about how your phone's going to kind of read the question that's in. It's in a text and it's going to give the answer or suggest the answer for you. I mean, that's handy, but I'm not sure if it's magical.
- [21:30]
Low Tony
Yeah. And you know, when we think about, let's look at facial display, the recognition to be able to unlock your phone, I mean, those kind of feel like magic. And that definitely in Apple's case was tied to the hardware. So to answer your question about how that will surface, like, how will AI surface better? I think it's going to be the ability to kind of take a task and take it in multiple steps and then the question becomes, you know, what's that user experience look like for the consumer? And then the good news, going back to your point about competition, Apple has the installed base that's passionate about their products and so that's a good place to start.
- [22:08]
Melissa Lee
Yeah. Do you also sense that, that maybe consumers aren't clamoring for AI. So Apple's, you know, we make so much of Apple being behind the curve and slow to the AI game with an offering, etc. But maybe consumers just don't. They're not ready yet to use AI in the way that we are all talking about it.
- [22:24]
Low Tony
Yeah. You know, and this goes back to Jobs and the ability to have the product management vision to not query customers as to what they want, but to figure out what it is that they want, present it to them so that then they say, oh my God, this is. I need that.
- [22:44]
Mike Santoli
Right.
- [22:44]
Low Tony
And in many instances, Apple has developed products that I'm not sure a product manager would have been able to pull out of a customer because they were not able to articulate what technology could offer them.
- [22:58]
Melissa Lee
Right.
- [22:58]
Mike Santoli
It is true. Face id, probably. It did seem like magic. And now it's kind of like table stakes. Like, all right, next.
- [23:04]
Melissa Lee
You know, we are so inured to the wonders of technology.
- [23:08]
Mike Santoli
What's that?
- [23:09]
Melissa Lee
We're so inured. Right. We're just like, oh, you know, so what? They can give you an answer to a question. It actually is amazing.
- [23:15]
Mike Santoli
Yeah.
- [23:16]
Low Tony
And that's the ultimate vision, right, is the ability to be able to have these products that become almost indispensable to a point where you don't really think about.
- [23:25]
Melissa Lee
Exactly. Yep.
- [23:26]
Steve Kovach
Low.
- [23:26]
Mike Santoli
Great to talk to you. Thank you.
- [23:27]
Low Tony
Thanks for having me.
- [23:29]
Melissa Lee
Coming up, a look at what the charts may be telling us about where Apple stock goes from here and from the Glass to the carriers to the chips. We'll take a look at the Apple ecosystem and the names that could benefit from the company's latest announcements.
- [23:40]
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- [24:05]
Steve Kovach
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- [24:06]
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- [24:28]
Melissa Lee
Welcome back to the Exchange. Let's head back to Steve Kovach at Apple headquarters in Cupertino with the very latest.
- [24:32]
Steve Kovach
Steve hey there, Melissa. It's all about wearables. So far we haven't gotten to the main event with the iPhone yet. So let me break down what we have here. The AirPods Pro 3. This is the third generation of those. Noise canceling AirPods. Better sound, better noise cancellation, all the things you'd expect. But the real cool features are health tracking. So you put it in your ears and it can measure your heart rates just like you can on your Apple Watch. Kind of taking some of those features off the Apple Watch and using them in the earbuds instead. And then the most interesting thing to me at least, is live translation. So if you and someone else who speaks a different language from you are both wearing these new AirPods Pro 3. You can speak in your native languages and then through artificial intelligence, it'll automatically translate. But if you're speaking to someone who doesn't have AirPods, the translation for them will show up on the screen of your iPhone so they can read your translation right there. So that's something pretty interesting going on the AirPods front. Now let's move over to the Apple Watch. This is the series 11, the 11th generation, thinner, more durable, things like that. It does have a 5G connection for the first time. And another key health feature for the first time is high blood pressure notifications. That is something that people have been looking at for the Apple Watch for some time. It's not a traditional blood pressure reader. It uses your heart rate and a bunch of other signals to kind of guess at a high blood pressure notification. Obviously you'd have to go to your doctor after that. So that's where we're at right now. They're just sort of wrapping up the watch section of the event and I anticipate any minute now we'll be diving into those new phones.
- [26:05]
Melissa Lee
Guys, just quickly see which health feature is pending FDA approval. I'm just trying to backtrack and figure out which devices could then see, you know, some pressure.
- [26:15]
Steve Kovach
Yeah, so this is that hypertension high blood pressure notification I just told you about. And I'll just note, yes, they said they do expect to get the FDA approval soon. In the past when Apple said things like that at launch events within 24 hours they had the approval. So they wouldn't be saying this unless they were pretty darn close to having that FDA approval. Melissa.
- [26:35]
Melissa Lee
All right, Steve, keep us posted. Thanks. Steve Kobach. Mike, you're taking a closer look at the charts here for Apple.
- [26:41]
Mike Santoli
Yeah, in an interesting spot here now, just today, basically flat. But if you look at a longer term scale, a couple of the different kind of trend lines are about to cross here. That's a five year chart. You have the 50 day moving average on the verge of crossing back above its 200 day average, sometimes known as a golden cross. It's not some kind of a guarantee of an immediate acceleration to the upside. But if you look at the past couple of times this did happen, it did lead to a bit of an up leg in Apple shares. Now the overall longer term trend isn't particularly strong right now. You'd need to rebuild momentum to maybe get above those former highs around 255. But worth noting that we might be at a little bit of a, of a crux point there with the stock. Now Apple relative to Microsoft, there isn't an inherent reason to think these stocks, stocks should move together, obviously different business mixes and all the rest. But over time they happen to have done that. So this is a five year and you see occasionally they gap out. That was when Microsoft kind of accelerated beyond Apple. Apple did have a catch up move and now you see that the gap is large once again. They also are very close in terms of overall market cap, just about three and a half trillion dollars. So just a couple of tea leaves that you can read there to say that maybe there's a little bit of an upside. Room for Apple shares now to contest a brewer for a CNBC news update contest.
- [27:57]
Contessa Brewer
Okay, Mike. A White House official is telling CNBC the US Was warned about Israel's strike this morning on senior Hamas officials in Qatar shortly before it happened. A U.S. official told NBC News that U.S. forces did not participate in the strikes. Officials in Qatar have been working to mediate a cease fire in Gaza and condemned the Israeli strikes. The US Embassy in Doha had ordered people in its facilities to shelter in place. New York officials said today 17.6 million fewer vehicles entered Manhattan since January when the city launched its congestion pricing plan. That plan charges passenger cars $9 to enter Manhattan south of 60th street during peak periods to try and cut congestion. I'm really trying to withhold my commentary right now, being somebody who deals with this all the time. But at any rate, the judge has put on hold the Trump administration's effort to end the program. And Cracker Barrel said today it's canceling plans to remodel its restaurants. Weeks earlier in August, the company reversed its decision to change its logo after conservatives on social media accused Cracker Barrel of changing its values. Cracker Barrel CEO led the effort to modernize the restaurant chain, trying to capture younger customers. But know those hard chairs remain when.
- [29:18]
Melissa Lee
You'Re having breakfast and all the tchotchkes all over the place.
- [29:22]
Contessa Brewer
Tchotchkes abound.
- [29:23]
Melissa Lee
All right, Contessa, thank you, Contessa Brewer. Coming up, veteran tech investor Gene Munster will be back with us to react to the latest headlines out of Apple's big events. That is next.
- [29:35]
Mike Santoli
The Apple event underway with the tech giant unveiling its first new iPhone model in years. Let's bring back Gene Munster, managing partner at Deepwater Asset Management, for the key takeaways so far. So we did hear about some of these added features on AirPods on some of the accessories. What jumps out to you?
- [29:52]
Gene Munster
Well, that hypertension monitoring. That's a big one. We have a venture business and we look at thousands of startups and for the past five years, we've met with companies that have proclaimed that they can come out with a device to monitor your blood pressure with these cufflinks that just didn't work. Apple came out with a novel approach. They essentially use the heart rate monitor, that same light, that green light you'll see to figure out what Your blood pressure is. Now, this topic is important. They gave a stat like as a billion and a half people have hypertension, it's a big deal. But also people don't want to know their heart rate or their blood pressure every minute that would raise their blood pressure. And so there's, I'm sure, some piece that they're going to work to. But taking a step back, bigger picture on the watch is that over the past seven years, they've really put together this as a power device for health and wellness. You think we talk about blood pressure, the ekg, we have the sleep monitoring, you have the oxygen sensoring. And now hypertension, like this is the best health device on the market. So that's 5% of revenue. Definitely a more impactful device with the blood pressure piece to it. But one other thing, Mike, that's jumped out to me is they've kept pricing unchanged as going into this. This is one of the key things I was looking at. So the AirPods Pro 3 pricing unchanged and the whole watch lineup unchanged. Kind of laying the groundwork that we're probably not going to see changes like I was hoping on the pricing of the iPhones.
- [31:23]
Mike Santoli
You were hoping you wouldn't see changes in the price?
- [31:25]
Gene Munster
I was hoping we would. I was hoping they would show some leverage there. But, you know, again, maybe it's under the, under the fold with changes to the capacity. They're going to flash a screen, a number up there or a pricing menu up there. You're going to have to go back and spend a little bit of time on it to figure out exactly what's going on. But I think the odds of that happening have diminished based on what we've seen for the first 30 minutes here.
- [31:47]
Melissa Lee
Oh, that's interesting. I would have thought maybe they would have kept the prices for these smaller items the same in order to jack up the price on the bigger ticket item just to keep people in the ecosystem. But I guess that's not. That's just a layperson's view.
- [32:00]
Gene Munster
I mean, that very well could be. Well, we'll see how this plays out. I still, whether or not they raise prices today, again, they've got leverage to raise prices. I think consumers need to just think differently, pun intended, in terms of how they value these devices. And I think Apple will push them higher in the years to come.
- [32:18]
Melissa Lee
Do you think investors are underestimating the impact of having this sort of array of health services effectively within a wearable device and Apple in order to keep people within the ecosystem? I mean, this is you know, I wear a watch all the time usually, and I do look at it and I have gotten some monitors, some watches, some alerts that have helped me along the way.
- [32:42]
Gene Munster
So some fun with numbers here is that if you look at the attach rate with watches to iPhones, it's about 15%. It's been slowly inching up, and so it's still relatively small. These features that they're adding more, but they have been compelling. And the big unlock here is what can happen with insurance. There are some insurance plans some companies sponsor, they'll pay for those subsidized watches. But I think, I mean, this is well outside of my wheelhouse talking about insurance and health. But the device is clearly something that is unique to the market. I suspect that those features are going to be valuable to healthcare providers over time. We've been waiting for that for years, too, for more subsidies. Haven't seen yet.
- [33:27]
Melissa Lee
Gene, hold on a second. They have unveiled the iPhone 17. Let's get to Steve Kovach for some of the features. Steve?
- [33:35]
Steve Kovach
Hey there, Melissa. Yeah. This is the baseline model of the iPhone 17. I know you were just showing some images of it, and if you thought it looked exactly like last year's model, well, you're right because it's basically the same design, little bit larger screen, the screen resolution is a little bit smoother than last year. Better camera, better battery life, all the things you've come to expect of these incremental updates year over year with the iPhone. We're still waiting for the big star of the show, that thin model I told you about at the top of the hour. But for now, this is the base model of the iPhone 17. We'll get pricing and a release date probably towards the end of the presentation in the next 10 or 15 minutes or so. But that's what we got right now as far as the iPhone 17. Still waiting for that air or thin model, of that we've been calling the air and the pro model. So I'll be back once we get more details on those. Melissa.
- [34:21]
Melissa Lee
All right, Steve, keep us posted. Gene, we'll go back to you. I mean, I guess this is exactly what we expected, but I'm just wondering how you think about that base model and the iPhone Air, which will should be released at any moment at this point. In terms of pricing, will it be a price differential, a premium for a thinner phone that has less battery life and a worse. In a, in a camera that's not as good?
- [34:45]
Gene Munster
I mean, they're going to, they're going to Put some sort of premium on the esthetics. And my, my guess is the headline pricing is going to be 899 on that air compared to the Pro at 999. And there'll be this debate about you pay an extra hundred bucks, you get a better battery, you get a better, better camera. That undoubtedly will come. But there is this question Apple's trying to pull a string that they have been masterful at. Two strings actually. One is just related to tweaking the product lines to appeal to new people. Maybe this would be more on the aesthetic side. And second is just kind of working those edges and angles around pricing. And so I think it's going to come in, I'm going to round up, call it $900 versus a thousand where the Pro, just as a point of reference is the two Pro models account for about half of total units. A little bit more than half of sales, but half of units. And then that compares to this where the Air is going to sit. That's typically 20% of units. Is that kind of that third tier phone that could bump it up. I think it will bump this up. The new form factor will bump it up to 25% plus. But that's really the substance of the the lineup is going to be the Air. And the two Pro models don't want.
- [36:01]
Mike Santoli
To make too much of intraday movements in reaction to real time events. But the stock is backed off about half a percent. I'm sure some people are just impatient to hear some of the good stuff. Gene, we heard earlier, you know that line from AT&T CEO John Stanke essentially saying he doesn't see anything earth shaking in the new line. But what is the carrier competitive dynamics mean for the potential for the new iPhone line? I'm thinking here of this idea of a new competitive cycle breaking out among the wireless carriers because of these sales of spectrum and whether that's going to be something that could be a volume tailwind.
- [36:35]
Gene Munster
I think the carriers commentary from carriers are valuable in terms of trying to think about how these cycles are playing out. And I think going into an event like this they know what's coming out but it's pretty hard to really put too much weight into that at the end of the day is that these carriers, just over half of their customers are iPhone customers and it is extremely competitive for them to be relevant to their competition when it comes to pricing and subsidies. And so there is a dynamic. They don't have that same aggressive pricing subsidy environment on Samsung devices because there's just A whole spectrum of those devices versus iPhones. And so there is a piece to this too. Where you have to keep in mind is that the carriers, there's a piece of the Apple relationship that they don't particularly like. They are Apple's biggest customers are those carriers.
- [37:29]
Steve Kovach
Right.
- [37:29]
Mike Santoli
But maybe they resent having to having to pay up and subsidize at times. Jean, really appreciate it. Thanks for all the Gene Munster from Deepwater.
- [37:39]
Melissa Lee
Coming up, we'll head back out to Cupertino as the Apple event continues. We're still awaiting information on pricing for one, but first take a look at shares of Nevia soaring more than 40%. The Dutch infrastructure firm striking a multi year deal with Microsoft to provide cloud computing power. Deal could be worth as much as $19.4 billion. The exchange is back in two. Welcome back. Let's get a quick check in the markets. Stocks pretty steady with all major averages in the green right now we've got the Dow higher by just about 4.10of a percent s and p adding 12.8 points right now, up 2.10of a percent. Nasdaq higher by 2.10 as well. The 10 year treasury pretty tame, 4.07%. You thought you might have thought there would have been more reaction to that big revision in payrolls for the year earlier today. That was sort of a surprise for sure.
- [38:24]
Mike Santoli
Although I do think the treasury market's dealing with the fact that it's rallied so hard since Friday. Yields are down below where they've been since, you know, early April. And we're going into these two days of inflation prints where it just feels as if you might have the possibility for a slight surprise and some upside volatility in yield. So yeah, not getting the reaction you might have expected. Also it's kind of old news. I mean, I guess it just reinforces the idea, underscores the notion that we have a little bit more of an impaired labor market than we thought.
- [38:51]
Melissa Lee
Yeah, one thing that is moving China stocks, if you take a look at the FX Xi, which are some of the biggest caps in China, that is hitting a new 52 week high in today's session. So that move has really been pretty unrelenting. And some people are even saying the stock performance has been so good in China despite the tariffs. So you know, we thought we would be weakening China with the tariffs. They're just exporting stuff less to here and more so to Europe, to Southeast Asia, to Africa, to other parts.
- [39:19]
Mike Santoli
Stock performance plus really GDP growth and export volumes and everything is coming in a little bit better than expected, almost to the point where you're expecting and I think there's been some gestures in this direction that the Chinese authorities are going to start to say let's not speculate too much here, a little overheated.
- [39:33]
Melissa Lee
Again in the domestic, sort of dampen that enthusiasm. And we're also of course watching Oracle. Oracle is reporting after the close today a lot of expectations around its OCI business. Oracle cloud infrastructure. Can it in fact be a real competitor to the likes of a Microsoft or an awb? It's sort of taking the page from Microsoft, a software company going to software in the cloud and then also offering infrastructure services. Can it pull it off? You know, the stock run suggests that investors are hoping that is the case.
- [40:02]
Mike Santoli
Especially when you consider that the legacy software businesses of Oracle arguably would have been of the type that would be on the outs right now based on what's happening overall in terms of investors view of enterprise software.
- [40:14]
Melissa Lee
Coming up from the COVID glass to Wi Fi, we'll take a look at some of the winners and losers in the Apple ecosystem next.
- [40:22]
Mike Santoli
Welcome back. Let's return to Cupertino and Steve Kovac with the headlines on the Apple event. Steve?
- [40:29]
Steve Kovach
Hey there Mike. It's called the iPhone Air. This is the phone that we've been talking about all morning. Now, the super thin brand new design. The Apple officially revealing this. What's really interesting is it's, it's a pro phone, meaning it has their best and newest and fastest chip and all those other features on the inside in that really thin package that you're looking at right now. It has about the same size screen as the pro phones do or the larger pro phones do. And again, that a 19 Pro chip that I was telling you about, which Apple by the way says has the same performance as a MacBook Pro. And on top of that there's another interesting thing on the chip side here. The Wi Fi and Bluetooth chip is now made by Apple. Previously Apple would use Broadcom chip chips, which I believe they're still going to be using in these other iPhone 17 models they're showing off today. But in this specific air model it's Apple's own homemade Wi Fi and Bluetooth chip and this and the new modem that they made instead of Qualcomm's we saw that debuted in earlier that 16e model in the spring. So that there's something at play here. We're seeing Apple kind of divorce itself from some of its suppliers, put its own technology instead of third party technology into its best Stuff. So waiting on prices, though, again, that's a big question on the street right now whether or not these devices are going to cost more than they did a year ago. I'm expecting this event, though, to wrap up in just a couple of minutes with those pro phones and then we'll get into release date and pricing. Guys.
- [41:55]
Melissa Lee
So the iPhone Air, Steve, is really sort of a showcase for Apple's homegrown technology. Is there also, is there a sense that these chips are more efficient and so therefore the battery life on a thinner iPhone will actually last longer because the chips use less energy?
- [42:10]
Steve Kovach
That's exactly right. So there's Wi Fi and Bluetooth chips and that modem that I was telling you about, when Apple makes that themselves, we've seen this throughout history with Apple. They're able to manage things like power and performance a lot better than kind of making a Frankenstein phone and using parts from a bunch of different suppliers. So this is just one step in that journey. I'm sure in a year or two years time, Melissa, I'll be here saying, and look, they're not even using Qualcomm modems at all anymore. They're just using their own modems and Wi Fi chips.
- [42:39]
Melissa Lee
All right, Steve, thanks, Steve Kobach. And of course, we're still awaiting pricing information on both models. Meantime, coming up, a deep dive into Apple's ecosystem. The exchange is back right after this.
- [42:52]
Mike Santoli
Let's get a check on some names in the Apple ecosystem as that Apple event continues. Christina Parts and Evolis has more in today's tech check. Christine.
- [43:00]
Christina Parts
Well, Apple's biggest launch event of the year is more about than just a new iPhone 17 and the iPhone Air. It's about the ripple effect across the entire Apple ecosystem. Apple just turned, for example, its new AirPods into a live translator, and that's why you're seeing shares of DuoLingo down about 2% on the hardware side. Corning is worth watching. It makes the specialty glass to use in iPhones as well as iPads. Then you've got Jabo that handles advanced manufacturing and packaging. And the list continues. Qorvo, Skyworks, Broadcom usually supply the radio frequency chips and connectivity components that keep Apple devices online. But as we just heard with Steve Kobach moments ago, Apple will be using more of its internal chips for radio frequency for the iPhone Air instead of Broadcom. And so that's why you're seeing shares of Broadcom about 2% lower right now. Qualcomm's role as well is shrinking, but we kind of know this Apple launched its own C1.5G modem in the iPhone 16e a while ago, signaling the start of weaning off of Qualcomm's chips. Apple's modem licensing deal with Qualcomm expires in 2027, which means Qualcomm's presence in new iPhones will diminish rapidly, even though its chips still power the current lineup. Keep in mind though, Qualcomm investors are very much aware of this dynamic, so it's most likely priced in. Hence why you're only seeing shares down 0.5%. And then you've got Taiwan semi Foxconn also in focus as critical manufacturing partners for much of the parts in all of these iPhones. That's why you're seeing shares up almost 3%. And then new iPhones often means action for Verizon, ATT Mobile since upgrade cycles drive subscriber growth. Some movement there and then beyond the consumer. A name I don't mention a lot is Jamf. I don't know if I'm saying that correctly. Jamf holdings, which manages Apple's devices in enterprise settings, often trades higher when new product launches accelerate adoption, specifically in schools and businesses. You can see shares though down about one and a half right now. Apple, though, is the headliner, but the event is just so much more. It's a lot about the web of suppliers, partners and competitors, all of which really are moving on once these announcements drops.
- [45:02]
Melissa Lee
Guys, Christina. Thanks Christina. Parts and Evolis. We often talk about the Apple suppliers and the impact. We don't often see them move on the heels of these events. We know that Corning provides the glass. In fact, Apple's investing in a Corning plant that was unveiled at the Trump event where he handed over a piece of gold to the President. So we know all this, but it is interesting to watch.
- [45:22]
Mike Santoli
We do know most of it. I guess the idea that it was the pro chip and the new iPhone Air is a slight surprise. So you wonder if it causes people to reassess the longer term path in terms of those relationships.
- [45:32]
Low Tony
Suppliers.
- [45:33]
Melissa Lee
The same compute power in the iPhone air as a MacBook. Yeah, that is huge. And keeping the prices of the wearables the same. That's also key here. Still awaiting the pricing for the iPhones though. I'll see you Tonight on Fast Money, 5:00pm Eastern.
- [45:45]
Mike Santoli
All right, that does it for us. Thank you for watching the Exchange.
- [45:49]
Melissa Lee
You've been listening to the Exchange.
- [45:51]
Christina Parts
Make sure you're subscribed to get each episode every day, same time, same place.
- [45:58]
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- [46:06]
Steve Kovach
I need a coffee.
- [46:08]
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