Welcome back everyone today on the Joseph Carlson Show. We have big tech earnings this week and that comes a day after Deepseek just rattled the markets. So yesterday things are a bit crazy. NVIDIA stock went down 17%. A lot of other companies were disrupted by the news of this Deepseek LLM, but now investors have to turn their attention. We have a very busy week this week. This is a huge portion of the
S&P 500 reporting earnings. For example, if we look at the Qualtrim earnings calendar here, I've gone ahead and highlighted what I think are the most significant earnings this week that we're going to be reviewing in this video. For example, later today we have Tarbucks. This one isn't the most important company, but it's one that has an interesting story. Starbucks has been under a lot
of pressure. They've been struggling because of their high-priced coffees and Starbucks was able to recruit the CEO from Chipotle, Brian Nickel, to help turn the company around. So Brian Nickel has been there for only a few months, but we're going to see what he plans on doing now. We also have, starting Wednesday, the most significant day of the week. Wednesday, we start the day with ASML reporting earnings.
ASML is one of the companies that was heavily disrupted by the news of Deepseek, along with companies like TSM and NVIDIA trading down 14 to 17%. ASML went down around 7%. It's down around another 2% today. So this company's been hit. Investors are a little bit concerned and I'm going to be sharing some thoughts on what to expect going into Asml's earnings. Then Wednesday after market close, we have Microsoft, Meta and Tesla. 3 massive names reporting earnings.
At the same time, Microsoft has the drama of their separation from open AI. Open AI which is being leapfrogged by Deepseek. Meta has their open source LLM called Llama, and then Tesla has a whole different approach to implementing AI. We're going to be going over what to expect for all three of these companies earnings. And then we have Thursday. Thursday's also a very big day. Thursday we have both MasterCard and Visa reporting earnings, both market open and market close.
These companies give us a view of how the consumer's doing. Thursday after market close, Apple's giving their report and we also have Intel reporting at the same time. So this is a massive week that will determine the direction the market goes for weeks to come. And we're going to be going through all of it. I'll be going through each of these companies one at a time, each day at a time, Tuesday through Thursday. So we have lot to get into.
Let's go ahead and jump in now. We start the week off with today, Tuesday after market close, we have Starbucks reporting earnings. Now, if we click on Starbucks, Qualtrim brings up this panel. It has a bunch of supplementary information about what to expect and the financials and what we can gain from this if we blow up. The chart here is that Starbucks does miss earnings a lot and This is why the former CEO was fired.
They had terrible financial performance, the stores felt more robotic, and the company didn't attract as many consumers. And I believe there's a lot of other factors playing into it. But at the end of the day, when ACEO doesn't do the job, when the shareholder is not making money, we're good at firing those CE OS as shareholders and getting new CE OS in. So now we have Brian Nickel
trying to turn this around. But as you see here, every blue dot is when they beat their earnings expectation. Every red dot is when they missed, and you can see that they're missing around half the time, maybe 40% of the time they're missing, which is terrible. You want companies to consistently beat earnings. When we look at these expectations, they're coming in under expectations around 30% of the time to around 40% of the time. When we flip over to the
revenue, this looks even worse. Over the past two years, they've missed their revenue estimate around 70% of the time. So when you have this type of awful financial performance of a company, never meeting expectations, it's time for change. And that's what Starbucks has done. Now, like I said, this feature gives you a lot of financial information about the stock. And I wanted to introduce a feature that fills you in on the context, not just the numbers, but what's going on in the
company. And that is this thing right here, which is what to watch for. It takes all the information, it feeds it into AI, and then we get an update on what Starbucks is actually doing. When we look at this, we see the strategic changes that Starbucks is implementing, the persistent traffic challenges. So part of the reason that Starbucks is struggling is because traffic trends are going down. They're actually getting fewer customers year over year.
The app had fewer people using it monthly than they did the quarter prior, which was one of the worst indicators for the company. Starbucks is trying to turn this around by offering discounts and deals and incentives to get people back into the stores. US and China market performance. the US and China markets face significant challenges with comparable sales declining 6% and 14%, respectively. This was just a disaster for this company.
And a big thing that the CEO mentioned, Brian Nickel, that he's planning on changing for Starbucks is making it feel overall less transactional. For example, you go into a Starbucks now and many of the newer ones feel like it's just a box. You're supposed to go into it, get your drink and leave. You're not supposed to hang out or spend any time there. They've made it feel incredibly transactional when that's not Starbucks history.
Qualtrum mentions that the company is focused on restoring Starbucks to a welcoming community coffee house, which includes a reduction in new store counts and an emphasis on store redesigns. Investors should track the progress of these turn around efforts, which aim to enhance in store experience and better align Starbucks core identity. These are all things that the CEO has been talking about.
So when we look at Starbucks earnings report today, we should be paying attention to those initiatives. Is Brian Nickel laser focused on enhancing the experience of the Starbucks locations? And I also think we should be tracking their usage, their growth over time. For example, the 90 day active rewards member is a huge key performance indicator for this company. It's been growing overtime steadily for years and then suddenly it hit a wall a year ago and it's been completely
flat. We need to see this go back up. This is the the secret bank that Starbucks has. It's their secret weapon, having 30 + 1,000,000 people use their app and upload their money to that app. When I look at Starbucks today, I think it's a decent company and a decent turn around play. But I'm still concerned about the fact that there's so many companies competing for their market share, so many caffeinated beverage companies that weigh on their pricing power.
So the only company that I have right now that's remotely close to Starbucks is probably Texas Roadhouse. This one's, well, it's somewhat close, but it has some key differences. I think the Texas Roadhouse is just a bit more unique. There's fewer competitors offering steaks at a reasonable price. Then there are companies selling you expensive caffeine. If I had a bet right now, I think Starbucks earnings will be OK. Investors expectations are already rather low leading into them.
Brian Nichol has been pretty good at setting those expectations. So I think there's room for Starbucks to paint a better future and hopefully get back on track, but we'll have to wait and see. Moving on from Starbucks, we get into Wednesday and this is where things really heat up before market open. We have ASML, which of course is one of my new holdings, and this one's been struggling. It's been struggling to keep above 600 into the 700 range. I've been buying into the
company new. In fact, it's in my tech category here. I have ASML that's now a $31,000 position, currently $1700 in the red. Since buying this one, it's swung back and forth between the red and the green, as companies typically do when you first buy in. Now, as we look at this company, before we dive into what to look for and all the key developments, I first want to just mention specifically how I think deep Seek news impacts ASML.
I don't think that the deep seek news is going to have a material impact on ASML in the long term. If you look at the way the ASML is situated and you look at this in terms of a hierarchy or a funnel, ASML sits at like the very top. They're the company that that no matter what's going on down here, when you're in the weeds, when you're looking at the companies that are using the AI, like open AI, they're right at the bottom. They're they're right at the, the very bottom of this hierarchy.
They're out in the battlefield. They're fighting these battles, this competitive environment. They're all competing with each other, whether it's open AI fighting against XS, Grok against deep seek, you have all these different companies battling it out. And then a layer above that you have the ones that are designing the systems like NVIDIA. You have AMD battling between each other. And then above that you have the different manufacturers like
TSM, they're battling it out. But then even above that, which is quite high on the hierarchy, you have the company that's really not battling anything. They're just supplying whatever demand there is for the entire chain, everything involved, which is ASML. They have no competition. There's no one doing what they're doing. So far, China has not been able to make a lithography machine
that can perform the same way. They can make a lithography machine, but it can't produce as many as quickly with as much accuracy, so it's basically useless compared to an ASML machine and ASML and their mote is incredibly wide. It's much more difficult to manufacture an ASML lithography machine than it is to spin up an LLM. So ASML is at the very top of the food chain. They're not battling with anyone, they're just watching what's going on across the board.
And no matter who wins in these battles, being fought underneath ASML is going to be a requirement to make high end chips. So as long as high end chips are a thing in the future and they're a thing that grows overtime, generally speaking, ASML should in turn grow overtime. And I don't believe that news coming out of China that there's a deep seek model throws off the
story of ASML. So that's the way that I look at it. Broadly speaking, to me, this is a winner regardless of who are the winners below it. And that's the way I continue to view the company. Now, when we look at ASML, this is a company that usually beats on their earnings expectations. They have missed a number of time, however, on their revenue expectations. And the first thing we're looking at is cash flow
pressures from this company. They had a huge increase in demand and then they had a glut in demand. And this is the cyclical nature of this business. They sell machines that cost hundreds of millions of dollars. So even small variants in their orders can cause a huge difference in cash flows and inventory. We're trying to see that improve throughout 2025 S The guidance on their levels of inventory and cash flow is going to be huge.
On this earnings report. ASML is going to give us a report on their advancements in their technology. They're always staying on the bleeding edge, years and years ahead of competitors, so that even if competitors catch up, they'll catch up to a model that's years behind. We have the EUV product line, in particular the NXE 3800 system. ASML has a road map going out like 10 years of their product development and what they want to be doing.
So they're looking far into the future, and that's what makes this company very predictable. Now, of course, they're going to have a lot of questions about the demand in AI. If Deepseek lowers the demand in AI, how will that impact this company and its recovery? They've noted in previous earnings call that they see AI and applications data to energy transition and electrification as a key driver for the industry's recovery and growth. So is their forecast changing?
And then finally, with ASML, it's one of the companies that has some geopolitical risks. This is something you have to know going into the stock. There's going to be tariffs and import controls. There's going to be restrictions with doing business in China from what I can see with this news of the potential risk of export controls, market dynamics related to China. I believe a lot of that is
currently priced into the stock. So going into Asml's earnings, I don't know if this is going to be the earnings that does it. Maybe they'll fall flat, but I think the risk reward for FML right now is weighted towards the upside. Investors are already very gloomy going into these earnings. The stock has really been hit over the past year. It trades at multiples far lower than its recent history, and I think that this company still
has a dominant Moat position. So for me, the dynamics of this company, the risk reward are attractive enough to make it a bet and we'll see how it turns out. Now moving on through Wednesday after market close, we we have 3 huge companies reporting earnings, Microsoft Med and Tesla. Let's go ahead and start off left to right with the biggest Microsoft. This is, it's a big one, Microsoft, it's close to the biggest company in the world, if not the biggest at at most times
and for good reason. I think that Microsoft is the poster child for the perfect fundamentals. Meaning when I look through the fundamentals of a company, they just don't look much better than this. In terms of cash balance and ratios and margins, dividend growth, share buybacks, return of capital policy, earnings per share, free cash flow, everything looks rather perfect. That's why this company has a higher credit rating than the US
government. It is one-of-a-kind and Microsoft has been a core holding in My Portfolio for quite some time. I really doubled down on the position and built it into a rather large position when it traded down in 2022 to around $220 per share. So now it's it's doing really well. It's been a a huge success. It's a $73,000 position or $72,000 with $29,000 of gains in the passive income portfolio.
If I switch over to the Story Fund, I also own this company across both portfolios, Microsoft is another $22,000 position with $9700.00 of games in the Story Fund as well. So this one across the board, both portfolios, it's just been fantastic. In my opinion, it's been one of the best risk reward companies in the market. When we look at Microsoft going into these earnings, a couple
things about the financials. If we bring up the history here, Microsoft is one of the companies that rarely ever misses on their earnings expectations. Look at that, they got one miss. Q3 of 2022, they missed. And if we look at how much they missed is a slight miss, right? I mean, even if you're nearly perfect, this one just had a slight miss, not a big deal, and they're right back on track. We look at the revenue and it's the same, the same quarter.
For whatever reason, Microsoft was off that quarter. That's not indicative in my opinion. They almost always beat their earnings and revenue expectations and I don't believe it's going to be any different this quarter. They're going to be on the top and bottom line. The big question will be regarding their commentary on the deep seek drama and on their guidance. That's really what's going to determine Microsoft's performance.
When we look at Microsoft's business, it is a vast expansive business that's highly profitable in all different industries, but the most important one by far is their Azure cloud growth, Microsoft cloud growth and AI driven revenue expansion. The current quarter is crucial for observing Microsoft strategic emphasis on the cloud sector, notably the Microsoft cloud which generated $38.9
billion marking a 22% increase. The investments they're making in the CapEx and the big investments they're making into AI already have a return. So you're getting a return on the investment of AI and that returns so far as $10 billion in revenue. That's questionable of what they're grouping into the AI and what they're marking is revenue there. But either way, Sacha is trying to say, look, we're already making money with AI.
And Sacha has tried to make clear that he's not in the game of hyping AI. He really wants real world applications. He wants to only grow AI and grow the investments in it to the point that they can get a reasonable return for their investors. And I believe he's going to do that. I think he's going to strike that balance.
That's why he's only expanding their CapEx budget to $80 billion, not 100 billion or 120 when they could easily afford to do so. The success of the AI driven products such as Copilot across Microsoft 365, Azure AI and GitHub represents a significant portion of this growth. That's the different ways that they're monetizing AI. The only thing that concerns me about Microsoft's AI strategy is so far I've heard negative reviews about Copilot.
Just people. A lot of people have complained about it, saying it's not that great. Marc Benioff has blasted it. He's the CEO of Salesforce, comparing it to Clippy. But from what I've heard from actual Microsoft users, he's not far off. A lot of people are complaining about it and saying that they're forcing it into their bundles. Overall, I have a high degree of confidence that Microsoft's reports going to be predictable. It's going to be good. I think that Satya is fully on
board. The AI demand will increase over time. We had a glimpse of that yesterday when he compared the deep seek drama with the Jevons paradox. Meaning that even as efficiencies go up and cost goes down, demand increases. It doesn't decrease. So we know how Satya stands on this. He thinks that AI demand is only increasing and Microsoft is well positioned for that increase in demand. Now at the same time, we have Meta that's going to drop their report.
If we look at Meta's earnings history, it's not quite as clean as Microsoft's, but Meta has a lot of beats and in some cases they beat their estimates by a lot. So they're they're a higher variance of beats. For example, in their earnings estimate of Q 4/20/23, they posted $4.39 compared to $3.63. That's a massive beat. Last quarter they posted $6.03 versus $5.25. So even though they miss sometimes, when they beat, they beat by a lot and this company has done an excellent job
getting back on track. I thought that Meta's growth was at least slowing down or stagnating, specifically with the amount of users on the platform. There's some time periods where the growth seemed to slow down. At around 2.8 billion users, it really started to slow and I thought at that point it was mostly saturated. 2.8 billion people's a lot of people. How many more people are there to even use Facebook and Instagram?
But I was wrong. They continue to grow 2.88 to 2.9 to 3 billion now to three-point 13.27 and 3.29. It just keeps growing. They just keep finding new people to grow into. This is an area that I just underestimated the company. I thought they'd hit a saturation level far sooner than this, and that can happen sometimes. The world is a very large place. A lot of people thought that Netflix would run out of subscribers at 250 million and here they are at 300 million.
So these companies can grow much bigger than you can expect as Internet based companies. Now, if we look at what to watch for going into this earnings, we can see the biggest impacts on the company. And again, right at the top, the thing that the company's focused on the most, what investors are looking forward to the most is not the daily active users or even the earnings per share revenue. It's commentary, investments and thoughts on the growth in AI and
the Meta AI impact. Investors should monitor the continued expansion and integration of AI technologies such as Meta AI and Llama across Meta's operations. This quarter has shown significant growth in AI driven interactions and AD creation, resulting in improved user engagement and higher at performance. Meta was one of the companies, ironically, that benefited the most from artificial intelligence. They improve the accuracy and performance of their advertising
a huge amount. So even though they they didn't really invent AI, it was open AI that really came up with it first. Meta used it and implemented it in their product suite in a way that other companies couldn't. And This is why I continue to repeat, it's not the company creating the innovation, it's the companies that are able to implement it and apply it in the most accretive applications possible. In this case, Meta had an incredible use case for artificial intelligence.
The company's commitment to AI infrastructure investment suggests potential for sustained growth in user engagement, ROI and AI driven features and tools. So this is very similar I would say to my investment case for Amazon, where Amazon has 1000 different ways to benefit from AI. Meta has a lot of different ways that are highly accretive to the company. They're using it in all sorts of ways to get people more addicted to their products, using their products for longer, lowering
costs, increasing efficiencies. But to do this, they need to make huge investments outside of just the AI stuff. Met is a company that still remains at a decent valuation. the PE ratio based on 26 earnings is a 23 Ford PE. Instead of 3% trailing free cash flow yield, this company has around 30% of its free cash flow eaten up by dilution and stock
based comp. But even when we adjust that out and we look at a free cash flow per share growth rate, they grew their free cash flow per share at 24.7% over the past five years. You can't complain about that. That is way above market rate of free cash flow per share growth. To put that in perspective, the average of the S&P 500 is around 8%. Meta is showing robust monetization utility. We're going to see if the growth
in their user base continues. Again, I thought it would Max out like a couple 100 million users ago, but they continue to grow and now I'm expecting them to grow in the future. And then finally, we also have broken out here, but this kind of goes along with the AI impact in the growth of artificial intelligence. We have the capital and infrastructure investments to build out all this AI they need
to make significant investments. And Mark Zuckerberg has recently said that these investments are going to be way bigger than people expect. Now normally when we look at capital and infrastructure investments, investors view that negatively. They don't like seeing all this money put into CapEx unless investors are convinced it's going to result in a positive ROI. In the case of AI, most investors are convinced of that.
So I believe now even if Mark Zuckerberg says, hey, look, we're going to increase the amount we're spending on CapEx by a lot, investors will share that on they like the CapEx spend because they believe in the story of AI. Based on the current valuation, the positioning and the tremendous growth that Meta has seen, I think it's really well
positioned for these earnings. I'm not going to be shocked if Meta has a really good day if it goes up after earnings and gives very strong guidance and a strong report. Now finally, we move on to another big one of the week, which is Tesla. Tesla's reporting earnings after market close on Wednesday. And we have here from Tesla their earnings history. It's another company where it's a mixed bag of whether or not they beat on their earnings per
share. It's difficult for Tesla to control the demand for their vehicles when it's sensitive to interest rates. So they can't control their earnings per share as much as other companies like Microsoft. They have a lot of subscription revenue. Out of the past five quarters, they missed on four of them, but the most recent one, they beat their earnings per share estimate by a wide margin. So if I had to guess, I think they're going to have momentum to the upside.
In the past two years, Tesla's had a very difficult time both growing their revenue and beating on their revenue estimates. Now, Tesla's a unique company where I love the product. I actually really like the designs of their vehicles. I think it's incredible what they're accomplishing. I really like the different business lines, especially their energy business and the network
they're building there. But then I look at some of the financials and valuations of the stock, and it makes me a little bit nervous. Now, a couple things that make me nervous about Tesla's stock is the valuation of the company. Just on a shorthand basis. When we look at Ford multiples, Tesla trades at a 95 Ford PE based on 2026 earnings estimates. Now, I'm not in the camp where I believe that you should value a company purely based on next
year's multiple. So I don't rule out companies just because next year's multiple looks expensive. There's always unique circumstances and context that needs to be added, but just as a point of data, that is a lot baked into the price, especially for a company that's mostly reliant on selling vehicles. Now, the other piece of data here is that you have the earnings per share and the free
cash flow per share. On a free cash flow per share basis, for every 395 dollars you're paying to purchase one share of Tesla, you're getting back $1.00 in cash flow per year. So you're paying almost $400 to get back $1.00 in cash flow. When I Scroll down and I look at the free cash flow on a trailing basis, you see the story painted out here. Now, again, this is based on the trailing free cash flows, which is during a low point.
So I think this looks a little bit worse than it actually is on the trailing metrics. But even if you look at the free cash flow yield based on 20/22, the $8 billion, Tesla's still very expensive. So even if their free cash flow returned to this record high that they had a couple years ago, it's still expensive. And the free cash flow this year is likely only going to be around half that, around 4 to $5
billion. So I, I view the company as pricing in a lot based on the current multiples, the current cash flows, the current situation of the business. So that's the first point of concern is that the valuation is rather high, pricing in a lot. The second point of concern is that the revenue has been flat for five quarters. It's the same story, I believe with Apple.
You have a company that has a combination of software and hardware that is selling a lot of devices or a lot of vehicles and it's finding it difficult to grow. So flat revenue has been a challenge for this company and I want to see that improve. So again, I'm not saying that Tesla is overvalued because overvalued denotes that you know the future and you know the company is a bad deal today. And I can't see the future with any level of certainty.
But based on the metrics, it makes me a little bit nervous. When we look at Teslas goals and their ambitions, it makes a little bit more sense what investors are pricing in. The big thing that investors are looking for is advancements in autonomy and AI. They want Tesla to build a full self driving system, become a robotaxi, displace companies like Uber, displace companies like Lyft, and have Tesla own a huge portion of that robotaxi market.
So with that long term vision, investors are willing to price in a lot today and pay a lot for shares today, and Tesla needs to show advancements towards that goal. A lot is riding on autonomous vehicles and AI. Although the broader EV market struggles with profitability, Tesla's maintain a profitable stance reflecting operational efficiency. This positive trajectory in deliveries and profitability could be central to assessing expectations for the upcoming quarter.
We're going to be looking at the energy storage and business expansion. This is becoming one of the bright spots of Tesla. Tesla's always making their vehicles more cost efficient. They're good at designing them so they're simple and easy to manufacture. We're looking at the new models here.
Efforts to lower vehicle cost through initiatives like the competitive 4680 battery cell production herald the future of a more affordable model with plans to deliver new cost effective models starting in the first half of 2025. We want to hear commentary on this from Elon Musk. We're going to be looking at AI specifically with robotics and their plans on implementing AI into their business.
Overall, Tesla's a great company that I think will have a decent quarter in terms of its fundamentals and progress. And I'd be excited about the earnings call in the forward outlook. But Tesla's also a stock that's priced with a lot priced into it already, and that's the part that makes me a little bit nervous. So this one for me is a little bit of a mixed bag.
I'm always a little concerned of how much investors are pricing in. That personally makes me a little nervous, but there's some Tesla investors that have their eye on the bigger price and they're willing to pay the price. Now. Next we get to Thursday. Before market open, we have MasterCard reporting earnings. After market close, we have Visa reporting earnings. I'm going to group both of these together because they're so similar. I currently hold MasterCard and I don't hold Visa.
A lot of people ask me why I own MasterCard and not Visa. I think they're both winners. I don't really have a strong opinion of one over the other. The reason that I chose MasterCard is it has a little bit faster growth, a little bit lower margin starting point that I think will grow over time and a little bit more international growth. I just had a slight preference for MasterCard, but I think both of them are going to do fantastic.
And in terms of MasterCard and Visa, when we look at the numbers here and bring up the scoreboard, we have these companies as companies that rarely ever miss. If we go down and look at Visa, it's the same story. They have a clean record with their earnings per share. They've missed three of the past 20 quarters on revenue and by a
tiny amount. Both of these companies have their core business, which is their Moat, their main network effect, and then they have value added services as an additional business where they have all sorts of informational tools and software for companies to use to help them out. Both of these companies are also indicators of the US economy, of
the economy internationally. They have more data than possibly anyone on the strength of the consumer, how much they're swiping their cards, how much they're doing online purchases. MasterCard has all the details of every bit of spending across almost every vertical. It's actually incredible the amount of information they have now based on the results of the big four banks that we saw last week, I think that MasterCard and Visa will have very strong
earnings. They're going to have strong earnings with their earnings per share and their revenue growth. And we know from the banks that the consumer is strong. Part of the bank's revenue is their credit card portion. So the banks have a lot of money to be made there as well as their partners with MasterCard and Visa. So we already have one big indicator that these earnings
are likely going to be good. My prediction on both of these companies is it's going to be another quarter of business as usual. Compounders like these continue to compound and I don't see any areas of weakness here. Now, next, we have Apple reporting earnings Thursday after market close. When we look at Apple, there's a lot going on with this company. But one thing that Apple is usually good at is beating their earnings expectation and their
revenue expectations. In the past 20 or so quarters, they've only missed 1 EPS expectation. They missed it just by a slight amount, right, $0.10, and they usually beat by around the same. So if I had a guess with their earnings expectation, they're going to beat. They miss a little bit more frequently with the revenue, but I'd make the same guess that they're going to beat. Now, Apple's a stock that it doesn't seem to matter what you think of it, what's going on with the fundamentals.
This company just continues to go up and the stock usually continues to go up. We look at it today, it's up 4%. With all this drama with Deep Seek, Apple really wasn't impacted. It's now back up to $238. What an incredible company. And again, it doesn't really matter what you think about this company. Apple usually finds a way to do well. the PE ratio is rather high, especially based on its history. The free cash flow yield is lower than its average history.
So based on the history of the company, the multiples have increased, the valuation of the company's gone up, and it's also increased in valuation at a time where the growth has slown. Now this is the exact opposite of what you typically see. Usually multiples expand for company when it's seeing increased levels of growth, but Apple's multiples are going up as growth is slowing. And that's what makes me a little bit nervous about the company.
The revenue has been flat for the better part of two years. We can see the revenue at $386 billion in Q1 of 2022 and $391 billion last quarter, almost no growth over the past couple of years. Apple's an incredibly profitable company, so they pile their money into buybacks. They try to reduce their share count outstanding, which typically results in an earnings per share growth. But Even so, even with all their buybacks, they're having struggle growing their earnings per share.
Regardless, Apple continues to shove more and more money into buybacks. It's just incredible to see. If we look at the past five years, they're averaging above $100 billion return to investors by the combination of dividends and buybacks every single year. Just an incredible stat from this company. No one else is doing this this consistently on this level. Now, I've owned Apple stock for over 7 years. It's one of the first
investments I made. In fact, it was one of the first buys I did in this very portfolio. I bought Apple just a small amount of it. And I continue to add to that position on the story that they're going to transition from a hardware company to a software company, that they're going to build out this entire ecosystem of software, insurances, applications, all these different apps like their Apple Music and Apple TV Plus. And that story has played out over the past five years.
The gains have come in. This has been a company that I've earned $34,000 in gains, but I've now reduced my position down to a $10,000 position. When we look at the story with Apple and we look at what to expect this quarter, of course investors are going to pay attention to the revenue, the growth in sales, the amount of revenue in all their various segments. We want to see revenue start to grow again. It's been flat for a couple years. Investors should expect service
revenues to continue growing. I have a couple concerns about that, primarily with how they earn their revenue through the App Store. I think it's likely that Apple's going to see more pressure with their pricing and their fee on their App Store. But in terms of the most important part of this company, it's whether or not they can really utilize AI in a meaningful way to drive revenue growth, sales and earnings for for this company.
We know about Apple Intelligence and so far the reception has been mixed. Some people like some features, but overall I think it's been a little bit disappointing. We have here that with the roll out of Apple Intelligence and AI features, Apple is poised to redefine user interactions across devices. The features available for iPhone, iPad, the Mac integrated advanced capabilities such as writing tools, conversational Siri, and ChatGPT integration.
Investors should be keen to know how these innovations could drive customer upgrades and increased engagement across the Apple ecosystem. This right here is the primary thing to look for with this company. Is Apple really capable of taking AI and integrating it into every aspect of the ecosystem to make it this incredible experience, one where you don't want to go outside of the Apple ecosystem? Now this is a story being sold and so far it has not been delivered.
Ale is not delivering on customers expectations. Analysts really need to put pressure on Tim Cook to explain what's going wrong with the implementation of Chat GT and AI into the ALE ecosystem because in terms of my expectations, they certainly have not been fulfilled yet. The iPhone doesn't feel any better, and in some cases, it actually feels worse than it did a year ago. And in terms of what I expect this quarter, I look at Apple as a fantastic company. It's one that investors
certainly love. They're bidding up the price of it, and it does have a promising story with the AI ecosystem. If Apple can really come out with some incredible updates that 'cause people to go, wow, I don't want to leave the Apple ecosystem. This is such a unique and awesome experience, then that would move the needle for this company. But as of right now, I'm just a bit nervous. The valuation is high, the revenue growth is slow, and the promises haven't been kept.
So right now I have a small position. Now finally, the last one of the week is going to be Intel. This is a company that's been an unmitigated disaster. I've warned investors for long periods of time that this company is it's going through a huge struggle. The challenges that they face are not ones that CEO's can easily solve. It is a complex, nuanced business. It's vast, it's operationally difficult to execute and they're facing a lot of headwinds.
Even though they're meeting some of their earnings per share expectations. You can see the trends overtime, the earnings per share are going down, the revenue is dropping, the company's losing market share and contracts, and it's become a huge turn around play. Intel's trying to be a Jack of all trades and it's not really doing a good job with anyone of those things. OI, look at this company as
still one that I would avoid. Now with companies that have depressed stock prices like Intel, it's not uncommon for them to have a big 10 U day, a big day where they exceed investors expectations and all of a sudden it looks really good. But I think that's how a lot of good investors get suckered into buying poor quality companies. You're buying into a company that's gone down 70% over the past five years. So for me, Intel's still in a void. That's going to be it for this
episode. Hope you enjoyed. See you in the next one.