00:00 Speaker A
After a busy big tech earnings week, Wall Street is reassessing its sentiment on tech titans such as Apple. Shares of the iPhone maker sliding as it warns of a $900 million tariff headwind this quarter. Our next guest though says this is still a top tech pick for 2025. It is Dan Ives, Wedbush managing director and senior equity analyst. And Dan, it’s great to see you. Um and there’s a lot to dig through uh in terms of big tech earnings. But let’s start with Apple here. I believe you raised your price target. We see the stock pulling back a little bit today and just like everything else, a lot of uncertainty here and environment where Tim Cook doesn’t feel comfortable really projecting very far out what is going to end up happening.
01:06 Dan Ives
And Julian, me and you have talked about a lot. Like I I actually think Apple should be up today. Be because when you look at the India pivot, I think this is the hall of fame. I think this will the history of Apple. This could be one of Cook’s biggest accomplishments given what we’re seeing in terms of the tariff tornado. And in terms of the 900 million, if you told me April 2nd, 900 million would be the incremental cost, that would be like a gift. I mean, my thought was potentially 2 billion. So I get it just in terms of the reaction, but to me like a week from now, I think the stock’s higher than it was before they printed last night.
02:15 Speaker A
How much of this Dan do you think comes down to the uncertainty of Apple executives on that call saying, listen, we can we can’t tell you what that tariff hit, that tariff impact is going to be past the June quarter.
02:45 Dan Ives
And look Josh, you know Apple as well as anyone, right? Over the decades. Like I just there’s just no way Cook is going to give anything outside June because first off, they don’t know the rules of the game. It all comes down to China negotiations. They’re pivoting as quickly as they can to India, but I continue to think like they’re pivoting to India. India’s probably going to be the for one of the first trade deals done. And I think it would be, you know, very, very surprising and I think probably, you know, not the smartest thing if they gave any guidances past June. Because I think that the fact that they gave guidance at all, I think is a huge positive.
03:57 Speaker A
Dan, what do you think iPhone growth looks like? Let’s call it over the next four quarters because there are some analysts and who think it’s going to remain relatively muted until that personally personalized AI that updated Siri comes to iPhone.
04:34 Dan Ives
But I disagree on that, Josh, just because my view is like look at the China number. I mean, you go back to last quarter down 11%. Constant currency was flat. Like the irony is like China is actually you’re now getting to a point that you should have a year of a year increase in China. So I think when you look at steady state growth, it’s going to be call it mid to high single digits as we go into what’s in the next three, four quarter, but eventually double digits. Now, clearly AI is going to play a huge role there, but it goes back to like services despite whatever slight miss. I mean, that that is rock Gibraltar like. Look at the free cash flow. I think you put it together. I mean this is a stock that’s closer to 300 than 200 over next year.
05:59 Speaker A
Um Dan, we’ve been talking about margins and tariffs. What about demand, right? Because we know that consumer sentiment is certainly not great right now in the US. So what do you think US sales are going to continue to look like?
06:26 Dan Ives
Yeah, and look and that’s part of like from a tariff perspective, I mean Apple gets it on both sides from the supply chain perspective but then of course consumer. Consumer confidence goes down thousand iPhones, you know, obviously those are going to be tougher and tougher in terms of the price points. Look, I think it comes down to like the when you look at the installed base and you look at how many haven’t upgraded in, you know, called four years. You’re still close to what? 275, 300 million. So if you if you even if you take more negative view, you’re going to be looking at 235, 240 million iPhones sold in the year and I think get 250 million as we go into next year. When I put that together, I mean relative to the numbers that we’re seeing today, I think now like streets cut numbers and it’s set up outside of tariffs for actually this probably starts to be a bottoming process in terms of growth.
08:14 Speaker A
Dan, broadening that out, which is the big tech earnings report this season that impressed you the most? Was it was it Apple or another name?
08:29 Dan Ives
Microsoft. How How How come?
08:35 Dan Ives
That was look, that was a, you know, a like quarter, right? I mean the point is when you look at what you saw on Azure 200 bit beat accelerated over the coming quarters, the abandoned data center story, the Pinocchio story, that’s done. So the point is like that was for Nadella. That that was I think just a pivotal moment to to show what’s happening at Microsoft, what demand looks like. Look at that guide. I think this is a stock that’s actually going to get stronger and stronger looking software, that continues to be a safety blanket trade in this storm.
09:55 Speaker A
Um switching gears, I we want to get through a lot with you because we know you cover a lot. So I want to ask you about Tesla because you, you know, of course we’re saying that Musk needed to recommit to Tesla. He seemingly did so, right? Although still one to two days a week in DC is not nothing. Then comes the report that the board had been exploring, searching for a replacement for him potentially. The board said, no, that’s not the case. What do you make of all of this this sort of back and forth? It it feels a little messy down.
10:47 Dan Ives
Yeah, of course it’s messy. I mean, and again, it’s smoke, how much is fire. Look, Musk is spending one two days in DC with Dodge the same chances that I’m playing for the Knicks in the playoffs. Like, I mean his days at Dodge are essentially done in the Trump White House. So that’s that’s my view and it comes down to like, however the board did it, shareholders, part of why we were so adamant and so loud is because the brand damage hit a point where the clock struck midnight, he had to choose. He did a phenomenal job on the call and I think that was probably one of the best conference calls that he’s done, choosing Tesla, he continues to be the biggest asset for Tesla’s CEO, autonomous optimist future. But when you get into like board, what happened? The reality is like, look, there was massive pressure. And I think Musk felt it and I also think, look, Dodge took on a life of its own. I don’t think he ever expected the consequences from a brand perspective and what this was going to become around the globe.
12:27 Speaker A
Do you think that there there’s been a lot of criticism of the board that they had not done their due diligence in the past, that they had not sort of overseen him enough that they were all too close to him. Does this kind of report show that they’re at least making an attempt trying to?
12:58 Dan Ives
Yeah. Yeah. True. Not sleep at the wheel. Yeah.
13:01 Speaker A
Exactly, like truly you’re exactly right. I think that’s always been the knock on the board, like rubber stamp board like, you know, Musk basically rules it, it doesn’t matter.
13:12 Dan Ives
Now regardless of like what’s true, what’s not, look, I think the reality is like the board had their back against the wall. They had to make I think decisions and there was pressure. I think Musk felt the pressure too. And that’s why that was a much different Musk on that conference call than I’ve probably ever heard in terms of the beginning. I think he read the room and the future of Tesla should not be taken down because of Doge. And I think that’s the reality. I think he chose the right path.
14:32 Speaker A
Dan, another name you know very well, uh scheduled report on Monday, that would be Palantir. Still a buy then?
14:45 Dan Ives
Messy of AI, right? Josh, this is one like Yeah. I think it’s going to be a trillion dollar market cap in the next three to four years. I mean they could just continue. The haters hate on this one. They continue to doubt it. Talk to any CIO, any product manager out there and ask about Palantir. I mean, they’re they just their solutions and algorithm is unmatched. And when you come when it comes to all the AI revolution cutbacks, that is all going into their sweet spot. And that’s look, that’s why they’re the messy of AI.
15:59 Speaker A
Dan, always great to see you, buddy. Have a terrific weekend.
16:04 Dan Ives
Great to see you.
