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On today's Bloomberg Intelligence Show. We dig inside that big business story is impacting Wall Street and the global markets.
Each and every week we provide in depth research and data on some of the two thousand companies and one hundred and thirty industries are analysts cover worldwide.
Today, we'll look at why Lovemaker LVMH posted weaker than expected sales last quarter.
Plus we'll discuss how the tech company Intel is now making good on plans to start spinning off non core assets.
But first we begin with the drug in pharmaceutical space. This week, Pfizer terminated development of its obesity bill after a patient in a clinical trial developed signs of liver injury.
This raises the odds that the drug maker will spend billions on an acquisition to break in the blockbuster weight loss market dominated by Novo, Nordisk and Eli Lilly.
For more, guest host Emily Grafail and I were joined by Mikey Shap Bloomberg Intelligence senior pharma biotech analysts. We first asked Mikey how big of an issue this recent news is for Pfizer.
Yeah, I mean, I think it's a sentiment issue. I mean, clearly, you know, you go to massive BC market out the one hundred billion dollar plus in terms of sides, and it's a market where you know, Phiz's already kind of trailing large farm appears like Lily Rosch Novo in terms of you know, the ABC pill itself. So this was Danny glitpron So what what it they actually did was
it used to be a twice daily pill. They kind of can that and repurposed it into a once daily Following the failure of another one of their OBCs pills, Lot of Glippron, So I'd say, you know, confidence into this readout, you know, was pretty low. We had ready kind of removed it from our models, you know, back in twenty three. But what it does, you know, create is, you know to two concerns. One is you know, the
trailing timeline in the BCC space. And two it kind of adds to the mid to long term growth worries of the company. So they've got you know, about fifteen billion dollars and lost revenue to looees that they'll need to kind of offset over twenty five to twenty nine. And at the moment, you know, it's quite hard to see you know where that where that offset and where that additional growth is going to come come from. Long
term obesity would be kind of one pillar. But you know, following the danaglip from read out today or the news today, you know that's obviously mean terminated. So you know, we think that they're going to have to go to you know, look to external assets in the obcit space if they're going to remain a relevant player in the in that market.
Is anyone else doing obesity pills in this market right now?
Yeah? So, I mean there's a few biotechs out there that are that are doing pills. In terms of the large farmer competitors, you know, Lily's got one, we'll see the data for that this year. Phase three that could potentially launch in twenty six. Novo's got one they're expected to file, and then you know Rush also has one
kind of in early to mid stage development too. On the biotech front, you know, we're seeing moves for you know, Viking structure turns and they all hold or or JP ones in their pipeline two.
Hey, Mikey, can you put into just perspective the size of this obesity market relative to other big verticals that drive these former companies.
I mean, I think the excitement around robust is you know one, it's you know, prevalence is rising. You're forty percent of US adults at the moment that are obese,
and it's a relatively underpenetrated market. So I mean, you know, penetration rates are you know, low single digits, you know in the US at the moment, you know, probably even lower elsewhere, you know, globally, and you know, we think that this market could grow, you know, well in excess of one hundred billion dollars so yeah, I mean it's a massive opportunity. I think in terms of you know, drug classes, I think PD you know, immuno oncology PD are one PD one drugs, you know, with a kind
of biggest class to date in terms of sales. So that's like your contruder Bristol or Duvo, but you know gr ones could potentially surpass that.
So Michael, where does Fizer go from here after this setback? Do they double down on obesc pills? Do they do they try something new? What's the plan here for Pfizer?
So, I mean they've got another oral jylp one in their pipeline, so it's in phase one. It's being developed for diabetes, notatural you know, whether or not they can also look at that in obesity two. But clearly the timeline here is the issue. You know, You've got oral jilp ones coming to market in twenty six onwards. You'll probably have a wave of new treatments coming in, you know,
towards the end of the end of the decade. So you know, we really think that Fiser is going to have to go out, you know, either in license at jilp one or do some sort of m and a they're well positioned to do that. You know, they've got ten to fifteen billion of M and a firepower you know to four acquisitions. So that's really you know, how we think that they're going to do, you know, play catch up in this space in terms of you know, I mentioned some biotechs out there that have you know,
quite appealing assets. You know, you've also got China to say, you know, we've seen some very competitive data in Chinese patients for some of those domestic players, and you know we've seen the lights of Novo Astro mark kind of all kind of you know, delve into China's R and D locker to essentially bolster their OBC pipelines.
Our thanks to Mikey Shaw, Bloomberg Intelligence Senior Pharma biotech analysts.
The trade war between the US and China has been heating up. This week, China ordered its airlines to stop taking deliveries of Boeing jets and to halt purchases of aircraft related equipment and parts from US companies.
The move is seen as a retaliatory measure in the ongoing trade war between the US and China, which is imposed here is to one hundred and forty five percent on American goods.
For more on Boeing, Nora and I were joined by George ferguson Bloomberg Intelligence senior Aerospace, Defense and airlines analysts.
We first asked George, how big of a deal this news is for Boeing.
I don't see the being a big issue, right, So this is one of those things that the relationship has deteriorated over a period of time. We took another look at when we saw orders from the Chinese airlines for Boeing, and there's been like fifteen or sixteen this decade. I think fifteen came in I think last year of two hundred and forty two orders from China that are on the books right now, the last real material size and orders from the big Chinese airlines we saw back in
twenty eighteen. So this is a relationship that's been broken for a while. Frankly, the Chinese haven't really been, like I said, ordering from Boeing.
So the bigger issue.
Here, I think is Boeing delivering some of the airplanes they've already built for the Chinese. Like I said, there's some two forty of them sitting in the order books. I suspect a bunch of them are already made and Boeing would like to get rid of them. Part of the shadow factory elimination they're trying to do to streamline operations. Is the pain in the neck to have an airplane on the tarmac that's sold that you've got to maintain, but the customer isn't taking delivery of.
It'll slow that down.
I think it might hasten some of Boeing's push to sell some of those airplanes. The Indians have bought a.
Bunch of them.
Maybe they're they're game for more, but I just don't This is China admitting what they've already been doing.
Frankly, So, George, what exactly is the goal here? I mean, to your point and also Jeffrey's analysts, they're noting that Boeing has largely de risked from China, they said of the country contributing roughly about five percent of the skyline over the next couple of years. But also a source of upside. What do you think the goal is here if there seems to be marginal impact here to Boeing.
Yeah, look, I think.
It's splashy right for the Chinese to make this kind of commentary, And look, I do think there's potentially some upside. So, look, there's a couple of things that's been going on right China. One is growing a lot slower since the pandemic. Prior to the pandemic, China would take in three three hundred and narrow bodies a year, more than half of them would be Boeing. And so you know since the pandemic, last year we saw about one hundred and fifty deliveries
of narrow bodies in a China. They were airbus airplanes. So and look, you know in a global trade battle, China could see a diminishing GDP. Right, this is a country grown eight percent last decade, fourish percent this decade. But if they get that, you know, if they decide they're going to negotiate with the US, they get some of that growth back on the rails. I think inside some of that negotiation you could see a requirement to order Boeing airplanes. Donald Trump cut a similar deal in
his last administration. So there is some silver lining. And like I said, I think the Chinese sort of they know that the Boeing's at one of our biggest exporters. They know they'll get some good headlines out of saying we're not going to take any more bowing airplanes. But again, I think this is already this is a microcosm of the US kind of begetting uncoupled from China right now.
So this isn't a major headwind here for Boeing. But what do you think are some headwinds that they could be facing. What are some near term hurdles, you know.
I think Boeing has been down for so long that I think most of the hurdles are clearing and you're going to see a pretty good year. I think the big issue this year is they've really got to get Spirit Aerosystems bought and integrated into Boeing.
I think that's well underway.
I'm hearing good news from people I know in the industry about quality coming out of Spirit. They've got to get rid of that shadow factory. These airplanes already built sitting on the tarmac that they're maintaining.
You know, that's just a huge dragon expenses.
They got to get them delivered out to customers, sold off to new customers, and it's all about in the back half of the year building more airplanes in the factory. We've been watching it in the first quarter of the year. I think they're getting about twenty twenty five through the factory every month to keep building on that cadence. That's going to generate the cash and the profitability they need.
And oh, by the way, they added.
Twenty six billion dollars to inventory since I think twenty eighteen we have it and support at some five hundred equivalent to five hundred and seven thirty sevens. As they start building from the inventory on hand, their cash generation is going to be supercharged. They could have a really nice back half of twenty twenty five.
Our thanks to George ferguson Bloomberg Intelligence, senior Aerospace, Defense and Airlines analysts.
Coming up, we'll break down why Elliott Investment Management is said to be building a stake in Hewlett Packard Enterprise.
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I'm Paul Sweeney and I'm Normal Linda filling it for Alex Biel. We moved next to the luxury sector this week.
LVMA shares dropped after the luxury group published weaker than expected quarterly sales.
The company was weighed down by sluggish demand for high end goods in China and the US and an escalating trade war.
For more, Nora and I were joined by Debora Aik and Bloomberg Intelligence luxury goods analyst.
We first asked deb what she took away from LVMH's most recent results.
Fashion and Leather goods is fifty percent of their sales, so actually this is a key one organic sales growth figure only, not yearnings. And we saw with Fashion and Leather it was down five the marketed expected down half. And what we saw behind that the US is holding o poque social Europe, but where they did a big chunk of their business last year from tourism shifting across from China to Japan. That's now dried up against two years of big numbers, and the big thing is that
it hasn't repatriated back to the mainland. So that was one side. Another side for them would be if we think about the wines and Spirits division, which houses their cognacs, that's still very tough in the US and also in China, and then Sephara was a big growth driver last year for them in the US that's kind of fallen away a little bit on the big comps.
So of course we know weakness in sales in China has really been an overhang for LVMH and just the broader luxury industry. But the EU expects US tariffs to remain as talks make little progress. So that being said, how are a lot of these luxury companies really thinking about this tear iff environment and the uncertainty there as it thinks about the US consumer.
We've done certainly a lot of our own work on Excel dug deep gone through all of the different factors, and we can see when we look at these companies a range of maybe two to eight percent or in
terms of needing price rise. So the highest end companies have the biggest margin, so therefore costs are lower and generally they're operating out of Europe, and so that means that they would need to price probably low to mid single digit to cover that, given that currently across Europe we have a ten percent power of risk hike.
Of course that.
Could change, but you know it's going to be difficult because the last three years we've seen price hikes of twenty five percent, so since we've had a pandemic recovery, so there really are running off a very high base on the price in they're going to have to really determine what they do in terms of more manufacturing over there where they can so for mid range for some of elv Matre's fashion and leather goods, we think around a third of their US is covered in terms of
US sales versus production. But there's a long way to go, and it can't be done quickly because you need really good artisans and to be training in labor, and that's one of the biggest issues for these companies.
I'm looking at the PGeo function on the Bloomberg terminine. I see that Asia excluding Japan picks up about twenty seven percent of LVMH's business. So it's material. What are they saying about China. Is this a market that they can depend upon being a growth driver going forward or not? Because it's I know just from reading your work and talking to you in the past, China's really a lynchpin for global luxury.
Yeah.
I mean the big thing and the big hit over the last quarter really in these share prices has been that second half of last year we saw the US really start to improve, and that was offering a bit of a lifeline until we could start to see China, hopefully by the second half this year improve that or that changes, the mindset changes, the consumer sentiment changes, and so yes, for the long term, there's still a lot to do for all these companies in each of then
we'll say they still pin their hopes on China for the long term, more infrastructure into the marketplace, owning the consumer more over there. But certainly in the short term and in the year ahead, the Cummuch uncertainty, and I really think that that hits hard on consumer sentiment, not only in the US, but also and particularly in China.
Another one we saw was biased off with Nivre in the very high end LA Prairie came out, and I'm just trying to get a feel of how beauty is doing over there, and the view there is that they've had to clean up China even more on their Laprairie brand, which is very high end skin care, and they're having to actually also think about Nivia and rebrand and to at least the premium level. So there's more price volatility in the market and that's already starting to creep up in China.
Thanks to Debek and Bloomberg Intelligence luxury goods analysts.
This week, we focus on a Bloomberg Big Take story titled GM and It's eight year, thirty five billion dollar EV bet brace for tariff head. You can find that on Bloomberg dot com. And the terminal.
Story looks at how General Motors has to figure out how to sell cars in Donald Trump's America after spending about thirty five billion dollars on its EV transition.
For more, Paul and I will join by David Welch, Bloomberg Detroit BUREA Chief.
We first asked David to break down why times are tough right now at GM.
If you look at Trump's policies, they're pretty tough on all the car companies, right, I mean, you've got this tariff regime out there that still hasn't been sorted out. Trump has indicated that he might have some leniency in the offering for car companies. But they've built up the supply chain and assembly in the US, Canada, Mexico and other places for decades now. They have made more investments based on USMCA, which was a Trump trade deal, and now that could be upended. GM makes two of its
evs in Mexico. It's two of its cheapest ones, the Chevy Equinox and Chevy Blazer, and so it makes it tough from that standpoint for those two vehicles and some of the parts that can in for those vehicles, and then generally for GM's business, tariffs are just not a good thing. They import vehicles, they import components, all of that that makes it tough. Trump has also said he hasn't done it yet, but he said that he wants to get rid of the Biden era Inflation Reduction Act.
Those are up to seventy five hundred dollars in tax credits for people who buy evs. That makes GM's life difficult. With this big investment they have out there. There could be relief on this. There are ways to get around it. But if you're General Motors and you've got a dozen of v's out there and the program on the whole loses money. They're improving the profitability, but it does lose money.
The pressure's really on, as it always has been, but even more so with Trump policies to get those vehicles to a break even or a profitable level and then sell them in big enough numbers where you continue to get economies of scale and you can drive the cost down. So it's not impossible. They're working hard at it, as we have a lot of detail on in the story in terms of reducing battery cost, improving efficiency at the
assembly plan level, that sort of thing. It's hard work and EV's this kind of transition was always going to be difficult. It is for everybody. But you know, in GM's case, they've done some reining in of investment, but they've really continued their push and some of their rivals have reined it in, pulled back in the face of all of this. So GM's sticking with it and they're really working hard to make it profitable.
David, As you said, the pressure is on does CEO Mary Barrow really have a dog in this fight to electrify GM in the EV space. I mean, of course she's trying to get a little bit of a peek into Tesla's playbook by hiring some of their veterans from Tesla, But do they really have the brand recognition that they need to push through on this charge.
Yeah, that's a tough one. I think what they're trying to do here is they're trying to change that right. So one thing they'll point out is one they doubled their market share in the EV segment EV space in the US over the past year, and they did even better in the first quarters. They've got some sales momentum, and they're doing a on the coast, which is where most TV buyers are. But it is it is a bit tough when Chevrolet, for example, known for big pickup trucks,
known for Chevy suburbans, Cadillact known for the Escalade. These are pretty thirsty and pretty expensive vehicles. They tend to do well in the middle of the country and in the South. So for GM, you can see why they want to push this right. They've got brands that do better in middle America. And if EV's are bought on the coast and you can get market share there, why wouldn't you push for that? It does bring in a different kind of buyer. And I think there's a bit
of chicken egg and an egg here. Does the brand hurt them from selling EV's or does does selling EV's help them help get recognition for these brands with people who didn't look at them before. And I think that's the case they're making and they're having decent sales success, so there's a bit of momentum there while they're trying to do it.
David tell us about the Ultium Cells factory outside of Nashville, Tennessee.
It's very similar to the one in Ohio. Fascinating to walk through. These are pretty pretty well automated operations. It's not like when you walk into an assembly plant and you see workers swinging a i'd say a set of seating for the interior over on robotic arms and putting that in or bolting engines like they're watching computers. They're watching automated machinery that mixes chemicals or puts that chemical slurry onto a metallic sheet to make parts of the battery.
Component's a very different type of thing. If you walk through a battery plant, or I should say a cell plant, it's kind of more like a like a chemical facility than it is like a traditional assembly plant.
Our thanks to David Walch, Bloomberg Detroit Bureau Chief.
We move next to news on the IT company, Hewlett Packard Enterprises.
This week, we heard that Elliott Investment Management has built a position in HPE worth more than one and a half billion dollars. OUR data shows that the investment makes Elliott one of the company's top five shareholders.
For more on this, Nora and I were joined by wu Jinho, Bloomberg Intelligence Senior technolo.
We first asked wujin what this investment by Elliott and HPE is all about.
It looks like Elliott is looking for an opportunity here to create a stake in terms of possibly extruction more cost actions from HPE, especially when the company is going through a down period from an execution standpoint as well from a demand perspective as well.
So what exactly are they really wanting to do here through this investment? As an activist investor, what do they want to change?
That's a good question, or I mean look, one of the things that I think they're doing is trying to extract more cost actions. One of the things that HPE did after the execution from the last quarter was cut costs, right, They cut about two five hundred to three thousand people. That's the plan over the next twelve to eighteen months. That's supposed to lower the cost structure by about five hundred basis points to have outex sales from twenty four
percent to about nineteen percent for the year. Now, the closest cop would be Dell and Della is running around fifteen percent op ex of sales. So I think, you know, Elliott is trying to look for a little bit more than nineteen percent op ecks of sales to drive up the earnings going forward.
So is this just a cost story from Elliott's perspective or is there something Hewlett should be doing they're not doing from a revenue perspective.
Yeah, from a revenue perspective. I mean, if we look about if we turn back to last quarter, there was a really big execution fall Paul in terms of they mispriced their servers. If you're an investor, I mean, how does a company miss price servers to really screw up the rest of the year from a pricing standpoint and
from a margin margin standpoint. So, you know, I wouldn't be surprised if Elliott is looking for our management change as well, because you know, HeLa Packard has lagged what Della has done from an AI server perspectives, and they really haven't gained material share on the networking side or on the storage side against some of their closest comps.
Well, Elliott has a really successful track record from Salesforce to CIS Strict Systems a few others. How are people really receiving this right now? Are investors happy?
You know, some of the calls that I've received initially off the print in Aura, is a Juniper deal off the table as a result, I don't think so. The one thing I will add was that Elliott was a stakeholder of Juniper multiple years back, and they did extract more dividends from Juniper as part of being a stakeholder. They may you know, I wouldn't be surprised if Elliott wants a board seat to guide the management going forward. But I do think that the HPE Juniper deal is still going to be.
On track thanks to Woo Jino Bloomberg Intelligence Senior Technology channelst coming up on the program.
Well break down how the tech company Intel is now making good on its plans to start spinning off non core assets.
You're listening to Bloomberg Intelligence on bloom Berg Radio, providing in depth research and data on two thousand companies and one hundred and thirty industries. You can access Bloomberg Intelligence via b I go on the terminal. I'm Paul Sweeney and I'm normal Inda. This is Bloomberg.
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I'm Paul Sweeney and I'm normal Linda filling in for Alex Steel. We move next to the tech sector.
The tech company Intel is now making good on plans to start spinning off non core assets. This week, Intel agreed to sell a fifty one percent stake in its programmable chips unit Alterra to the private equity firm silver Lake Management.
The transaction values Alterra at eight point seventy five billion dollars, and that's about half of what Intel paid for a decade ago. The deal is expected to close in the second half of twenty twenty five.
For more, guest host Emily Gerfaio and I were joined by Mandeep Sing Bloomberg Intelligence senior tech industry analysts. Your first asked, Man Deep, what Intel is up to these days?
Well, they got a new CEO, and I think he's making the moves. Everyone was looking forward to what is he going to do differently than Pat gel Singer, And it looks like he wants to turn around the foundry business. And there was one school of thought that thought Intel should sell the foundry and focus on chip design like Nvidia. But clearly he feels, you know, foundry business can be turned around. And so the easy pickings here is raise cash, you know, get rid of the non core assets, which
is al Terra here. So they're selling fifty one percent stake, mobilize another business that comes to mind that they could sell and look. With a company like Intel, everyone knows that you know, you coun'try turn around this company to show high growth. It's more about how do you manage the company in a way where they're not burning a lot of cash as well as they can have you know, low to mid single digit growth. And I think that's going to be the playbook here.
So, man, deep is silver Lake getting a good deal then with this axe show?
I mean Intel paid you know, sixteen billion plus ten years back, so they held their company for ten years and now they're selling at half the price. And look, this isn't a high growth asset, which is why it was noncore to Intel. But we know Semis isn't that sweet part of the cycle where everyone seems to be bullish on AI and Semis. And so maybe silver Lake can come up with a better way to you know, leverage all Terra in that semi space because that's what
everyone seems to be excited by. How can I play in the demand for Semis?
Why did they solve a whole thing?
Well, I mean it's a private equity player, so you know, they're not going to put a lot of money in one asset, and they just wanted fifty one percent so that they can run the company. At the same time, Intel can benefit if they are able to successfully turn it around. And yeah, I think Alterra still needs Intel technology to be successful, so it's not as if there's a complete decoupling. It just allows Intel to focus more on the core business, the foundry and their CPU business,
as opposed to focusing on Alterra and Mobile IE. I think down the.
Line, should we expect with this new Intel CEO to see more news like this Intel selling other parts of its business.
I think so Mobile IE is definitely another one which is noncore to Intel, even if they want to double down on AI and chip design. Within AI, I mean Mobile I is more autonomous driving. And yeah, that also came from another acquisition that Intel did back in the day, so I hope they don't end up taking a lot on that one. But I do think the playbook here seems to be that they want to focus on foundry and core CPU chip design.
Foundry that's making chips right.
Yes, the manufacturing side.
Now, who else does that?
Well, we've heard the news around in Vidia, you know, using TSMC to make their AI supercomputers here in the US, So that's that was quite a bit of news because I would have thought TSMC would partner with Intel, and there was some rumblings about you know, TSMC doing something with Intel, at least here in the US. But it looks like Nvidia is thinking about making their next CI supercomputer with TSMC. No talk about Intel, and that will be here in the US.
So then I thought there's some deal that there were Intel's gonna do a bunch of that stuff.
Yeah, so that's where there was talk about Intel and TSMC partnering. So that was the foundry side of Intel. But I don't think that's happening now.
So the Biden plan with Intel, which was to do a big, big deal, big investment, is that's still on or No.
So the chips Act money was given to Intel. It was also given to TSMC for the Phoenix fab where they will be making this AI supercomputer with Nvidia. But look, I think in the case of Intel, the challenge has always been why have they not participated in this AI wave? And the Chipsack money didn't help over there.
Our thanks to Mandy seeing Bloomberg Intelligence senior tech industry analysts.
Staying with the tech sector, we recently learned that tech giant Apple has been exempted from one hundred and twenty five percent tariffs on goods produced in China. This includes iPhones, iPads, max, Apple watches, and air tags.
Separately, we learned that Apple will begin analyzing data on customer's devices in a bid to improve its AI platform.
For more on this and all things Apple, Nord and I were joined by Mark German, Bloomberg News Managing editor for Global Consumer Tech. We first asked more how he thinks Apple will just the Washington policy moving forward.
That's a big question.
We're on a bit of a roller coaster here where Apple's constantly needing to think about adjusting, and then how are they gonna adjust? And then what happens if they adjust and then they have to adjust them a different direction. You can really think of Apple as just like the biggest ship in the water. Ye, it's gonna take a while to move anything. So these adjustments they have to be made with precision, right, And so it's really it's
a sporadic situation. You really don't know what's going to happen. But at least for now they're in good shape. But who knows a long that's gonna last. But no matter what Trump does moving forward, I'd be very surprised if this he talks about this sectoral tariff on these types of devices, maybe I'm wrong. I just don't think there's any way it's gonna be one hundred and forty five percent. So either way, you're still at a big improvement.
Of course, with the tariffs as an added layer of a headwind for the company, they're not stockpiling, and so we're seeing them increasing shipments and everything. But it seems as though this isn't necessarily due to more demand, but more or less the fact that they're just trying to prepare for the worst. Is that the case, Yeah.
That's right, trying to get as many phones as no tariffs or at low tariffs as possible, whether it's from China during this period right now with no tariff, whether it's from India at this period with the lower tariff, get as many as you can into the US channel to fulfill demand. The problem is that we're about to go through a product transition, right They're about to move to the iPhone seventeen.
So the question just got the sixteen.
I'm behind, That's fine.
The point we're trying to make here, yes, yes you are behind. You're also behind, right, But the point you're trying I'm trying to make here is that these iPhone seventeens are not ready to be pumped out. So the question is what is the terariff situation going to be in September October when these things are flying off the manufacturing lines. Where are these going to come from? So at this point it's so difficult to figure out what's going to happen.
What do they need to do?
In reality? I can't imagine and China not being an integral part of Apple in the next five years. I mean it has to, right, you can't switch.
Nothing's changing. Well that's not true. Things are changing, but China's not going away. Yeah, right, don't forget that the US makes up about what a third of Apple's overall sales. You've still got two thirds of the world that's going to rely on this China supply chain. China's critical for rest of the world.
So how's Apple doing in the AI game right now? I mean, so, I know we have iOS what's going on there? I know we have iOS eighteen point five or something coming soon that's coming.
But Apple AI is not doing so hot. They've just replaced the person in charge of Siri, right, They're pulling any lever they can. One of the issues with Apple Intelligence is that their privacy stance has prevented them from gathering as much data possible in order to train their AI models. To get AI models working, probably you have to train them with data, right, and the best data you can get is the data that your customers are in putting into their iPhones. They don't do that. Open
AI does it. Google does it. That's why their tools are so great. What Apple is doing now is they're putting in this new privacy centric approach where they're going to take your data on your phone, analyze it on the phone, compare it to the fake data.
Right. They use fake data that.
They just create out of thin air while using AI, compare it so they know which fake data is most similar to the real data, and then they'll use that best of the bunch fake data.
To train their AI model. So you're seeing.
These it is it is complicated, hard to wrap your head around, and so they're basically pulling every lever they can.
Now we've said in the past, Apple doesn't need to be first in things because they just need to wake to the technologies kind of out there and then they're going to come in and make it beautiful. Is that still hold for AI.
That's the problem usual playbook. You're right, don't be first, be the best. Well, they're certainly not first, and they're probably the worst. Wow of all the big tech names. They are the worst in AI of all the.
Big tech How concerned, Copertino, I mean it's extremely concerning.
They were going to have the head of AI retire. Perhaps he's not going anywhere. They just replaced him on Siri. There is certainly a lot of work and accountability that needs to be done there, And the question is how long is it going to take till you have something compelling? And I do think it's going to be at least a few years. But don't forget AI is not the phone. The phone moved fast, but there was new innovation in
the phone. Maybe you know every year every couple of years AI, you're getting a new deep Seek every three weeks.
There could be a big.
AI innovation announced tomorrow. In fact, I think Open Ai just rolled something out Chat GPT four Dot one model the other day or yesterday. And so the speed at this that this moves at is what's really concerning, because Apple just doesn't move at that speed.
They're not built to operate at the speed of the break.
I think they can, but that would also require a big c change because Apple is historically bad at integrating larger companies into their overall operational workforce. And so it's like you take a step back and you ask yourself, what is Apple really good at. They're good at the phone, They're good at the iPad, they're good at the watch, They're good at health stuff, They're good at core.
On device software.
Not really good at cloud though they have some excellent cloud based services at this point, not really good at AI.
They're getting good.
At TV from you know what I hear from people who like their shows. But they're just a company at this point that's running based on legacy ideals and they need a bit of modernization. And the question is is that going to happen. Don't forget this company is run by the same group of people.
Who's just as does Tim Cooks still have the support of the street and of the board.
Oh yeah's you know, Tim cook wouldn't write his own ticket, There's no question there. They're down nineteen percent this year, right, but look how much they're up over the last fifteen years. What he's done is amazing, you know, everyone counted him out after Steve Jaws passed away.
Right, Steve Jaws is.
A one of one innovator in mind and this type of thing, and it would have been very easy and not surprising, if you know, Apple not folded up shot, but really moved away from what they were, And in many respects they have moved away, but at the same.
Time they've grown so much.
The way Apple's at the center of all our lives today was not the way they were at the center of our lives ten years ago. They were not at the center of the universe.
A decade ago.
They're at the center of the center of the universe today.
Because Steve Jobs left them with a lot.
Of momentum and Tim Cook executed better than anyone else would have been able to execute.
Our Thanks to Mark German Bloomberg News, a managing editor for Gloeble Consumer Tech.
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