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Looking at the shares of Apple fifty two week, Hi, there's a little bit better feeling I think about iPhone sales in particular. It's kind of helping this story here today. Mandy Sink joined us. He's our senior technology channels for Bloomberg Intelligence. Mandy, what's going on with Apple here? A little bit of a rerating? Is it just trying to catch up? Is there a different view that's forming out there on these shares?
I mean I would call it a positive data point after the new iPhone launch and look, you know everyone was quite negative about Apple's ability to grow unit shipments. What they're suggesting here is people who were waiting for a new device are upgrading, and especially China is always a focus given you know what is going on with Nvideo. So Apple being a hardware company, you know, being able to sell into China is always a positive and looks like there are positive data points over there.
As well, so many what's the attraction to this one? I mean, I'm sitting here with the iPhone. I don't even know what this is. I don't even know what model that's not about. But what's the attraction to this new phone? Why is it doing so much better?
Well, so that's why I want to put it in context. It's not as if, you know, at least from my vantage point, we shouldn't be thinking about a big upgrade cycle here. This is normal refresh here. With that being said, you know, they launch a couple of news cus there is a lighter iPhone this time around, so the attractiveness is just people. People who want to upgrade for a new battery, for a faster processor, probably for a lighter
from factor are doing that. But to my mind, the missing ingredient here is a large anglid model running natively on device, and that is where Android still is a better experience when it comes to, you know, the LLM side of things, and Apple has to step up either through their own efforts or through a tie up with one of these frontier lms, but there is no doubt that they need more to do when it comes to a generative AI.
Is there any sense Mandeep that Coopertino shares your sense of we got to get going now kind of thing.
I think so. But look, I mean there are two ways to go about it. One is you step up in terms of your CAPEX investments, the way hyperscalers have done, you know, whether it's a Microsoft, Google, or Amazon or Oracle. The other is, you know, you take the acquisition route. And everyone is sort of thinking, you know, Apple will go the acquisition route or maybe partner with someone like Google now that that antitrust overhang is behind them. So either of those two I think should work because Apple
still controls a distribution. And look, when it comes to hardware, I am excited about an AR glass form factor. I think they are working on a chip when it comes to these new AR glasses, and there will be relevance of AI when it comes to your you know, glasses form factors. So from that perspective, there is something to look forward to. From a hardware standpoint. They already launched one, you know, AirPod Pro three with real time transcription. That's exciting.
So those are the.
Kind of features they will be looking to add. But I don't think they are going the Capex route in terms of you know, one hundred billion dollars in Capex, the same way Hyperscalers are doing.
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Let's get to another story here today in the luxury business. Here carrying the big company that owns a lot of big brands, I think Gucci as well. They're backing away from their beauty business. They're selling it to Loreal four point seven billion dollars. Let's get a breakdown on what's going on there. Andrea Felstad, she's a Bloomberg in opinion. Commis Andrew, can you tell us what Caring is doing here?
What this transaction shows.
Well, it's being dressed up as a partnership between Caring and Loreal, but what it really is is effectively the sale of their beauty brands to Loreo. They've got a new CEO, Luke to Mayo. He's come in at a time when the balance sheet is very stretched. His predecessor, who is now chairman, well bought a lot of things, including Creed, this very very upmarket perfume business as share in Valentino to try to make the group less dependent
on Gucci. But that really increased debt. At the same time, Gucci's really slowed down and they're having to revive it. So they're saying it for four billion euros in cash. That gets some money in to deal with the debt and gives the new CEO a bit more time to turn around Gucci.
Andrew, isn't this a complete turnaround? I mean, didn't the company want to bulk up the beauty and cosmetics division exactly?
I mean they're saying, you know, this is built on the potential that they created. I mean, to be fair, they bought Creed. They paid a lot for Creed three point five billion euros. Try worked out to be about fourteen time sales, you know, an awful lot. But what they did it had a supply chain. They did that as a play perform to build for beauty. And the argument is they have been able to do this deal because of that platform. That's probably kind of rather generous
looked at him. I had a big decision to make when he got in. He either had to stick with beauty and invest in it. But with that day, it's gone in awe and the need to reinvigorate Gucci. It's got an awful lot more calls on its cash, so he just decided beauty wasn't a priority.
I consider myself a Gucci expert. I read the book, I saw the movie. In the movie, yes exactly, so Andrew. I mean, it's obviously an iconic brand. What are the experts saying that needs to be done? Because it's such an important part for caring.
It is it really is. It would add its peak and in sort of twenty eighteen nineteen, around that time, it was sixty percent group sales. Now, you know, Kerring had an amazing run with Gucci. They put in this quite unknown designer, Alessandro mckayley, and the prevailing look has been very minimalist, and he came in with these big logos, clashing print, granny chek and it was just a bread of breath of fresh air and it change prevailing fashion.
But that was in Stor twenty sixteen, after the pandemic, when Obviously, nobody was feeling terribly good soaring inflation. It just felt very out of sync with how people were feeling. And they tried to turn it round and have a much more minimalist look, and it just wasn't Gucci. Gucci works best when it's very fashionable, when it's over the top. So they brought in Dumna Versalia, who was at Valenciaga, and he is trying to, you know, really revive it. He's gone back to the Tom four days when it
was very successful. He's gone back to the Alessandro and Kaylee days. He did this crazy film in Fashion Week. There was absolutely bonkers, but it got people talking about Gucci again. I was in New York a couple of weeks ago and I went to the store in Soho and there was a big installation of all his things and the capsule collection. It's trying to get people interested in Gucci again, and he's sort of going back to the future to try and revive its magic. Whether it's
going to work, I'm not sure. I thought he was the wrong person to be appointed, but so far he seems to be doing all the right things.
Andrew, can you tell us some of the challenges krig has been facing. I mean, there's that slump in Chinese demand, higher US tariffs as well, what are they facing.
So what we what we've got at the moment is the one percent of still doing very well. But they're not buying Gucci. They're buying Hermes, they're buying Brunello, Cuccinelle, Laura Piano. They want these very expensive upmarket things. Now the rest of the less rest of the luxury market that aspirational customers coming under pressure. And she had a lot of those aspirational customers, particularly in the US. So you've got the sort of esthetic going out of fashion
and you've got these aspirational customers coming under pressure. It's really had a bit of a perfect storm and it needs to really revive Guccini and it had the take of Annetta wasn't doing too bad and their designer went to Chanel. So you know, every brand is sort of you know, got its challenges.
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Talking about AI. That's been a theme for this marketplace for it seemingly three years now. Everybody says that AI is going to revolutionize their business. Even McDonald's say it's going to revolutionize how you go through the drive through.
I'm like, all right, whatever, just get my order right.
It's also you here in the financial services business, Patrick Daniel Joines is here, vice President Advisor Digital Solutions at Commonwealth Financial Network. Patrick, is AI going to replace the financial advisor?
Absolutely not the you know what we're seeing today in terms of there's a there's an experimentation and a scale that's happening within the AI space in terms of advisors, and you know we heard that with the robo advisor years ago in terms of will it replace and so from an AI capability, absolutely there's going to be an elevation of the advisor in terms of what they are possible and what they can do in terms of the art of the possible.
But absolutely not. There's going to be a need for empathy, there's going to be.
A need for understanding human behavior, and really from a technology perspective, that's going to be very difficult to do. Now. With that said, you know, if I were to look into the three to five year sort of glass in terms of what's going to look like, it's going to be very difficult. In terms of how that may look like.
You might have digital assistance right that are paired up with a human advisor that is using hyper personzed information and services to help the advisor support those clients, but generally speaking, you're not going to see that replaced completely in terms of what a financial advisor can provide their clients.
So the human relationship not dying basically, So how is a I then changing the way you manage money?
So there's just a tremendous opportunity in that space in terms of right now, what we've seen over the last two to three years in terms of experimentation has been around client meetings and note taking any efficiency within the space, and so you're seeing advisors freeing up time to focus more on financial conversations with their clients or asset management.
And so what we're going to see in the future as this technology evolves, and we're starting to see it already, is in the space of doing business modeling or financial modeling or looking at it from a model's perspective in terms of where I should be putting from a next
best action perspective. And so we're going to start to see a lot of that in terms of informing advisors to make sure that they're having those conversations in a timely fashion and potentially identifying maybe gaps that if they didn't have, say an agent or this digital assistant next to them, that they could identify in a timely fashion from a tax efficiency perspective, or just from a a from a scale perspective, or from an a s allocation perspective.
You know, when I talked to some of the advisors here at a conference like a Commonwealth, they say, you know, I really want the platform to kind of free up more of my time so I can go out and work with my clients, prospect for new clients, really help me with the back office, help me with the technology, help me with all that. How are you guys integrating AI into that part of the platform.
Yeah, absolutely so where we started.
So, first off, before we started from an AI implementation perspective with our affiliates, there was a there's a risk obviously, right from a compliance and a regulatory perspective.
So years ago we.
Formed an AI or a JENAI Risk Committee at Commonwealth to try to make sure that whatever we provide from a support perspective as we move forward within the AI space, that we do so in a compliant and make sure from a data retention and risk perspective that we take care of that.
As I mentioned earlier two years ago, it was more.
Around around a curiosity with the technology. I'd say a year ago, twelve to sixteen months ago, it was more around experimentation and now what we're seeing at Commonwealth. We just rolled out an AI meeting tool or a couple of them actually earlier this year, and we're seeing now at scale and that's where I think you're going to start to drive the adoption. So we rolled out a
new platform. It's a third party platform. From the AI meeting perspective, we already have twenty percent adoption on that and just folks talking to one another at events like this from a networking perspective, we're going to start to really see that driven in terms of adoption and acceleration within our space.
Now I see the.
Excitement coming from you when you talk about you know, AI and all that can do. But what concerns you when it comes to AI in the space.
Yeah, there's a lot of things. And honestly, the first thing I think about is just deep connections. And I think about AI not just generally speaking in terms of from a financial management or in our space, but you think about and I think about my own personal life where I would call my folks, whether it's my dad on some advice or I need, you know, help with
whatever it might be in terms of life. Well, I think you're finding a lot now people are just going to gen AI or it's a large language models for that. And so the face, the face, the deep connections, and that's what really our industry.
Is rooted in. You know that, That's what really.
Concerns me in terms of how do you balance you know, from you know, making sure that the human's still in the loop and the technology. And I think there's going to be a way to do that. But that's what really concerns me. It's the connections, It's the people, it's the face.
The face.
What's sure some people go to chat GPT for financial advice. I mean it's well.
Eighty percent of the people that are using a large language model today have actually used it for financial advice, and it's a little bit higher for the younger, the millennials, et cetera. It's about an eighty two to eighty three percent adoption of people using it for financial advice. And so again that's an opportunity for financial advisors to make sure that they get in front of that and to guide that direction in terms of where they go and how they use it.
My number three off bring his into financial services business. He's at the stage of his career where he is dialing for dollars, doing all the basic grunt work. But he finds it as a challenge that a lot of the young people that he prospects come back and say, well, I've got chatter GPT, how do you put that in your training?
What's the response to that?
Yeah, so from a financial advisor in terms of when
they're having that conversation. Yeah, So it's all about guidance, and so you know, there's an opportunity there, I think in terms of making sure that you're directing, and that's where the value of the advisor comes in, right, and so it's trying to get in front of that and providing information that's more curated and but also recognizing that there's this other and that's been in the industry for years in terms of whether it's various websites you can
go to, et cetera. It's just getting elevated more accessible. But I think you just need to make sure that you call you know, you sort of you address it and then you account for it.
So and what emerging technology are you keeping an eye on?
Oh?
Yeah, So, so for me, from an AI perspective, there's a couple of things. One is quantum computing actually, and so with quantum computing, you're seeing it's a it's a symbiotic relationship actually, so you're seeing AI improve the quantum computing in terms of what's capable, and then from a quantum computing perspective in terms of the.
Power and what can be provided. It's elevating the AI.
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