Welcome to AI Collision š„,
In todayās collision between AI and our world:
- Another September, another Apple launch
- Three players that benefit every time Cupertino launches something new
- A big deal with Microsoft sends a stock price soaring
If thatās enough to get the iPhones launching, read onā¦
AI Collision š„
Every September the world tunes in for annual Apple pilgrimage/ritual…
A large stage, tech-chic attire from Tim Cook and whichever SVP is roped up on stage, the promise of the āmost advanced iPhone ever” which is inevitably slimmer, cameras in a different spot, better battery and the allure of maybe, just maybe something good regarding AI.
This year itās the iPhone 17 and, if rumours hold, a new HomePod-style smart hub (think Amazon Alexa products, but with the Apple spin). And the suggestions are it will all be infused with Appleās long-delayed on-device AI branded āApple Intelligence.ā
But for all the hype and fanfare a new iPhone release will be with its eyewatering price tag, hereās the blunt truth, Apple is a $3 trillion giant and a brand spanking new product release doesn’t have the WOW-factor it used to.
Even if the iPhone 17 is truly revolutionary and becomes a record-breaking launch it will barely nudge the needle.
The fireworks for investors arenāt in Appleās own stock. Theyāre in the little-known suppliers that provide the guts of these devices.
Today with Apple’s impending new product release I thought it might be a good idea to dive into some of those companies that form the bedrock of Apple products notably, Broadcom and the much smaller Qorvo, and Cirrus Logic.
Broadcom: the $1.6 trillion wireless giant
Broadcom (NASDAQ: AVGO) is no stranger to Apple. Its filters and wireless chips already handle the heavy lifting every time your iPhone connects to a 5G tower or a Wi-Fi router. Roughly 20% of Broadcomās revenue flows directly from Apple orders.
Apple and Broadcom have an existing a multi-year, multibillion-dollar deal for U.S.-made 5G components, ensuring Broadcom gear is baked into iPhones for years.
More importantly, reports suggest Broadcom is co-designing Appleās first dedicated AI chip ā codenamed āBaltra.ā If true, thatās Apple entrusting Broadcom with the silicon that could one day power Siriās leap into a genuine AI assistant.
The market has noticed. Broadcomās shares have hit new highs on the back of AI data-center demand, and Broadcom is now worth $1.6 trillion.
It’s a big-un I know, but the Apple AI angle is an under-appreciated boost that could take Broadcom even higher.
Broadcom is now in lockstep with Apple’s AI ambitions and if Apple can hit the nail on the head with their slow-to-market AI, then maybe Broadcom benefits more, regardless of what the iPhones can deliver.
Qorvo: old school tech in new school gear
If Broadcom is the giant, Qorvo (NASDAQ: QRVO) is the focused specialist minnow. Its domain is radio-frequency (RF) chips ā the power amplifiers and filters that let an iPhone talk to networks across dozens of frequency bands.
Every time Apple adds a new wireless standard (Wi-Fi 7, 5G Advanced, etc) Qorvoās opportunity grows.
Qorvo isnāt a household name. Itās a tiny-cap ($8 billion) compared to Broadcomās mega-cap heft. But thatās exactly why its Apple exposure matters so much.
When Apple ramps a new generation of phones, Qorvoās revenue can swing hard in either direction. Itās high risk potentially high reward exposure to Cupertinoās upgrade cycle.
The risk? Apple is known to juggle suppliers, sometimes shifting sockets to Qualcomm or even notorious for bringing functions in-house.
That threat keeps Qorvoās valuation subdued relative to the size of its Apple business. But if the iPhone 17 family really leans into expanded wireless features and the rumours of a HomePod hub with next-gen connectivity hold, Qorvo could be a surprising winner this cycle.
Cirrus Logic: what even are codecs?
Then thereās Cirrus Logic (NASDAQ: CRUS). This Austin-based firm makes the chips you never think about but touch every day, audio codecs, speaker amps, and haptic drivers that make an iPhone sound crisp and vibrate just right.
Cirrus lives and dies with Apple. For their latest earnings it showed around 91% of net revenues were from Apple orders. That dependency is terrifying on paper. But in practice, itās been a ticket to repeated windfalls as Apple keeps layering new tactile and audio features into each phone.
Think of the Action Button, the periscope zoom lens, the Taptic Engineā¦ all powered by Cirrusās silicon. If the iPhone 17 leans into camera upgrades and AI-driven interactions, expect Cirrus to once again capture more ācontent per device.ā
For investors, Cirrus is the definition of a leveraged Apple play, tiny compared to its master, but if Apple’s products laden with Cirrus gear are a smash hit and volumes skyrocket, it’s capable of big percentage gains when it nails a design win.
Apple stock has been sluggish this year, down about 5% as analysts grumble itās behind in the AI race. Maybe the iPhone 17 launch reverses that sentiment, maybe not.
But remember, even selling 200 million iPhones barely shifts Appleās $3 trillion market cap.
Broadcom, Qorvo, and Cirrus Logic donāt have that problem.
A single Apple product cycle can move their revenue lines meaningfully and their share prices with it.
Broadcom offers the blend of AI growth and Apple stability.
Qorvo is the riskier, high-octane RF bet.
And Cirrus is the speculative small fry that can pop if the iPhone 17 becomes a runaway success.
If you want exposure to Appleās AI push without paying up for Appleās lumbering stock, consider the suppliers and companies that really make the iPhone launches the big event of the year.
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Everyoneās hyping Nvidia and ChatGPTā¦
…but thereās a piece of the story the mainstream isnāt covering. AI has a fatal flaw: itās running out of power. And according to Nick Hubble, the only solution may lie in an overlooked $38 āMaster Key.ā
Itās already up 31% this year ā and with a major Washington decision due on September 17th, it could be about to surge much higher.
Boomers & Busters š°
AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).
Boom š
- Western Digital (NASDAQ:WDC) up 16%
- Broadcom (NASDAQ:AVGO) up 16%
- Micron (NASDAQ:MU) up 10%
Bust š
- Microsoft (NASDAQ:MSFT) down 1%
- Nvidia (NASDAQ:NVDA) down 3%
- AMD (NASDAQ:AMD) down 7%
From the hive mind š§
- At some point soon I’m going to do an essay on the “Dead Internet” theory. Because what Altman is saying here is true, and it lends itself to further prove the Dead Internet theory.
- What if AI doesn’t take a few jobs and change a few industries, but it takes all jobs and puts everyone out of work? If we’re all out of work, does that mean none of us are out of work? Imagine a world where no one works… good or bad?
- They’re one of the up-and-coming AI infrastructure stocks and this little Dutch AI players just inked a deal with Microsoft that’s sent their stock price rocketing higher!
Artificial Polltelligence š³ļø
Weirdest AI image of the day
ChatGPTās random quote of the day
“In a startup, absolutely nothing happens unless you make it happen.”
ā Marc Andreessen
Thanks for reading, and donāt forget to leave comments and questions below,
