It’s been an eventful day at the start of Apple’s (AAPL) Worldwide Developers Conference (WWDC), where the iPhone maker showcased its Apple Intelligence AI initiative. Yahoo Finance’s Josh Lipton rounds the day out on Asking for a Trend, where he looks back at some of the biggest market takeaways from Monday’s session.
Harvest Portfolio Management Co-Chief Investment Officer Paul Meeks drops in to talk about whether Apple’s newest AI play has enough pull to significantly enhance its sales
Yum! Brands (YUM) Chief Digital and Technology Officer Joe Park joins the program to talk about the automation and AI tools the company is testing and plans to implement at its Taco Bell, Pizza Hut, and KFC locations.
We’re breaking down the trends today that are motos tomorrow.
There’s a lot to keep track of.
So we’re focusing on what you need to know to get ahead of the curve.
Here are some of the trends we’re gonna be diving into.
It’s Apple’s time and the A I spotlight tech giant unveiling what it’s calling Apple Intelligence and hoping to cash in on the new tech hype that’s driven record gains for fellow S and P NVIDIA.
And the A I trend is broadening beyond tech, fast food companies are betting on automation to streaming order, prep and boosting sales.
But I speak with a young brand executive about the impact existing A I initiatives are having on stores.
Plus the competition is heating up for NBA media rights, sports and sporting rights negotiations could reshape the outcome of the streaming wars and basketball is no exception.
We start here with Apple highlighting, anticipated A I announcements which included a partnership with open A I failed to blow away investors today.
Apple finally to keep pace in the A I race with the likes of fellow mag seven names like Microsoft and Google for more.
Now we are bringing in Paul me cos IO at Harvest Portfolio management and partner at Wall Street Beats.
Uh Paul.
It is good to see you and, and listen, you have been Paul following tech a long time investing in tech names for a long time, Paul you, I’m sure you’re watching Apple’s Big show today gi give us the takeaways, Paul.
What do you make of it?
Well, I think what they did is they made A I announcements that were essentially table stakes, maybe a little bit better but nothing really distinctive except for maybe the privacy piece, not only for the software developers but for the end customers, but that’s always been part of Apple shtick and I’m not surprised at all with the subdued reaction post the meeting because what you really need to see with Apple is all these A I announcements accelerating revenue growth because here’s a company that hasn’t had a year to year, double digit revenue growth quarter since the December quarter of 21 and five of their last six quarters revenues.
Actually shrank.
I do not know if what they announced today will be, it’ll definitely be a catalyst.
It’ll sell some iphones, but I don’t know if it’s gonna be significant enough to get the, uh, bowls.
Uh, you know, even more excited if you get this stock close to what is already a all time high.
And as I said, the company had been growing and, and, and Paul, you’re kind of leading me where I wanted to go here because I think it’s the big question you touched on there for viewers listening right now, which is when they heard, you know, listen, they heard Tim Cook today.
They, they heard, uh, Craig Federici, that’s Apple’s Software chief.
Do you think what you heard today is Apple, laid out his vision and laid out these A I features, Paul.
Do you think that is enough to kind of jump start a meaningful iphone upgrade cycle?
You know, we would expect Tim Cook to take the stage in September introduce those new shiny iphones.
Do you think we get that Paul?
Because you sound a little bit more, maybe skeptical there.
Oh, I’m definitely uh skeptical.
We’ll get a uh cycle, you know, like for example, Dan Ives, well known analyst that covers this stock buddy of mine and one of your competitive networks thought this was a dream team scenario announcement.
But remember part of the lift will be that we have a lot of iphones in the ecosystem that are now 34 even five years old.
So they’re due to be refurbished.
But I don’t think this is gonna be that big of a deal or the people that say it’s gonna be a big deal.
They don’t really know, uh, they’re speculating because I’ll believe it when I see it because as you know, you know, there’s a lot of money going into A I infrastructure builds and that will continue for a while.
But the, uh A I apps, the follow on, I don’t know if they’re going to be that distinctive.
Might they be commoditized features they very well could be.
And so I am not betting on any of these software companies or device companies, even Apple, but I stick with the infrastructure builders that I can count on.
I don’t know if there’s gonna be enough gold at the end of this rainbow once we build all these large language models, even including for Apple.
If I were to channel my inner Apple Bull though Paul, I would, you know, I, I’m Dan Ives, I’m Gene Munster.
I’d probably say what you kind of just alluded to there, which is, I’ve seen stats Paul that something like 40% of iphone users are now having a device that’s more than four years old.
That’s a lot of old iphones out there, Paul and see.
So the idea would be, you know, this, that, that it just isn’t gonna take much to get those people to upgrade in the fall.
I’ll throw in some, some shiny new A I features, I’ll give them a faster processor, a better camera, the usual Paul and that’ll be enough.
What do you say to that, I think you’re alluding to the bull argument that it’s gonna be a monster upcycle.
Right?
I think that I’ve said about an hour or so ago said super cycle.
And the problem is with the stock, uh, at about its current price, you know, almost $200 a share.
And if you think the stock is worth $200 a share, you’re expecting a big move in the iphones.
Will it be glorious if it is Paul, we’ll have to have you back regardless.
Thank you, Josh, the S and P 500 NASDAQ notching fresh records as investors look ahead to key inflation data and the Fed’s policy decision.
But as you were just talking about the big story today in the market really was Apple and I want to zoom out and just think about the stock reaction that we had from Apple.
So shares fell today.
But I think you could really probably reason this might have been in a little bit of a buy the rumor, sell the news type of event when we look closer at the stock price action we’ve seen in Apple.
So what I pulled up here, Josh is a two month shares were up 15% over the last two months.
And that’s as the rumors started percolating about what they were gonna be doing with A I the partnership with Open A I, we, we’ve known about a lot of this in bits and pieces and I think that’s really where it got priced in.
I don’t know how much new and substantial we really learned about the plans thus far.
And so maybe it makes sense that shares slide a little bit after getting close to a record high again.
It’s, you know, also Josh, I, I wonder how much part of this is.
I mean, just the reporting has got a lot better and, and there’s reporters out there, they lay out the show beforehand.
So that’s one thing.
So it’s hard to get that one more thing kind of price and to look at that pop heading into it.
It should never be shocking if you’re not able to just keep driving that stock higher.
Right.
I feel like the only stock these days that’s able to do that is maybe NVIDIA, but in general, that’s a hard thing to ask.
WWC Josh, it’s not, you know, it is not typically an event investors look to it like, ok, this is, this is an event that pops the stock.
And the other thing that I think sort of fits into this, our second takeaway just pleasing investors with A I has been a little bit harder this year.
Interesting chart from bespoke here.
So what it does is it takes a look at stocks with over a trillion dollar market cap.
It’s our mag seven companies minus Tesla and then companies without a trillion dollar market cap.
We’re looking at the second quarter performance and the year to date performance and just really what sticks out here is that A I trade has not been encompassing everyone, right?
It’s been NVIDIA, some other big names.
We just talked about Apple perhaps benefiting from some A I hype, but it hasn’t been the C three A is of the world, some of the smaller companies that really rallied last year.
They’re just not quite participating right now.
And I think that speaks to maybe what we’re seeing in the market as a whole, a lot of large cap bias right now.
But also just where we’re at in the A I trade, maybe it’s a little Tre Tyre.
I wanted to Josh, get your thoughts about whether maybe after runs like this, maybe you’re starting to get some, some investors scrutiny about, you know.
All right, I’m gonna divide really the, the A I market between those who can talk to me about actual use cases given the data on monetization versus what can feel sometimes like marketing flow.
When we, when we think about this number here and the companies that are in it, think about a company like Microsoft or Meta, right?
They’re telling you A I is contributing a certain amount to Azure revenue growth A I is contributing a certain amount to meta’s reels.
The smaller companies aren’t able to do that an investor and an analyst.
I can start modeling that, right?
Yeah, you can actually sort of put it together a little bit better.
And the final thing here, this was out from the New York fed today.
I thought it was interesting.
Consumers have not felt this confident about stocks going up in the next 12 months in about three years.
Is that too confident, too positive?
So when you take a look at other measures of sentiment, you set me up for my final chart.
This is this is Bank of America sell side indicator.
Josh.
And what this takes a look at is how many uh the allocation that sell side analysts are recommending to stocks right now.
It’s right here at about 55.
If we were get up to this blue line at 58 that’s when Ser Subramanian and her team at Bank of America say, all right, press the brakes.
And I think that’s been interesting because we’ve talked a lot about the markets at record highs.
Everyone’s so bullish, everyone’s so bullish.
But metrics like this, we still technically have more bullishness to go, which I don’t know.
All right, coming up A I is already at work at fast food chains across the country.
We’ll talk with young brands, Chief Digital Technology Officer about the latest investments that is next on asking for a drink, the S and P 500 performance in recent years striking a resemblance to the early two thousands.
Julie Hyman joins me now with a closer look at the correlation between the two timelines.
Julie.
Well, this comes to us courtesy of Laurie Casino over at R BC head strategist there and basically what she’s mapped is overlaying different time periods for the S and P 500.
What you see here is the bottom line, the purple line is the post tech bubble and post 911 post pandemic is blue and then the current quarter uh uh excuse me, and then post great financial crisis is the amber one here that we are seeing as well.
So this is our current, where we are today is the blue line uh that you’re seeing here and basically they’re normalized.
So if you all started at 100 what would returns look like?
So she’s mapping it on top of most closely.
Uh what we saw post the tech bubble except recently, we’ve seen more of a breakout to the upside for the S and P 500 in this period of time.
So the resemblance has sort of diverged from that period to have even more out performance now versus that sort of reckoning period of following that tech bubble bursting.
So interesting sort of layering on here.
Um But when it comes to what’s gonna happen next, she doesn’t necessarily, Josh thinks that there’s more upside here.
She uh that was where I was gonna go to just the bottom line.
Laurie think, you know, looking at the charts.
Does she think the stocks keep moving higher from here?
Well, her fair value estimate for the S and P 500 is actually 5300.
So that’s below where we are today.
And in the same note, she looks at sort of different scenarios for the Federal Reserve.
She says if things sort of unfold as the market now seems to be expecting with the fed able to cut rates by the end of the year because things are OK, not seeing a re acceleration, inflation, economic growth continues.
Then that would be sort of her base case scenario.
But she said we could see a worse scenario where inflation doesn’t come down where the fed does not cut.
And in that case, 5300 might actually be too high, which also suggests sort of a reversion to the mean if these two time periods are indeed similar that this breakout is maybe not justified.
Moving on A I could soon make fast food even faster young brands, putting automation tools to work at KFC, Pizza Hut and Taco Bell locations across the country and it’s making an impact in the company’s most recent quarter.
Digital sales hit a record accounting for more than 50% of total sales for the first time in Yum’s history with us.
Now to discuss all things automation is Joe Par.
He is young brand’s chief, digital and technology officer, Joe.
It is good to see you and you know, Joe, it’s a perfect time to have you on the show because we’ve got A I on the brain.
Joe, of course, Apple, today you had Tim Cook.
He’s talking about Apple’s new A I strategy and vision and A I features how Joe let’s start there kind of high level.
How are you integrating Joe A I across your businesses?
So at ya, we’re ingraining technology into all parts of our business and we wanna make sure that we have easy experiences for our customers, our team members while driving profitable growth for Y AM and our franchisees.
You know, to your question, you know, for us, as we think about um we’re building and buying technologies that make things easy in terms of experiences, easy operations and easy insights and A I is the perfect technology to do that.
Um For us, one of our favorite examples of seeing A I at work is in our Pizza Hut business.
We have this platform called Dragon Tail.
It’s a proprietary piece of technology that really helps our team members make pizza.
Uh You can think about from the preparing stage to the baking stage to uh delivery to a customer.
You guys trying to figure out how to make this job really easy for a team member so that customers get hot and fresh pizza all the time.
And so the there, Joe, you’re talking about how you’re kind of implementing it for, for maybe managers and employees.
Are you also experimenting with it when it comes to the the consumer?
Yeah.
You know, for us, we believe in the power of digital to build a deeper relationships with their customers end to end.
And that customer journey is so important.
When you think about one example with Driver, let’s take the example of Taco Bell.
Customers really want to make sure that they have timely acknowledgment at the drive through.
They wanna make sure that they’re understood when they’re ordering and there’s friendliness.
So one technology we get really excited about is voice A I, we’ve piloted in five stores at Taco Bell and we, we’ve seen the results.
We know that team members enjoy the technology.
Uh It feels like they’re getting another team member added to just handle the drive through.
And we know that customers when they’re asked about it, they see parity when it comes to the friendliness, the timeliness and being able to be understood by A I.
And sometimes Joe, you know, you, you find yourself kind of experimenting with new technology, you can get yourself and you know, you can feel some blowback.
I think that Wendy’s and dynamic pricing.
I’m interested, Joe, Joe, how you kind of manage that and maybe just get your thoughts on, on dynamic pricing in, in general Joe uh uh across yam and our brands.
We don’t do any dynamic pricing.
What we do do is have intelligent pricing where we do use technologies like A I to come up with the best prices we can offer uh to our customers.
Yam and our brands are known for the great value we bring in the delicious food.
And so when it comes to things like pricing, we’re confident that as we partner with our franchisees, we can protect the unit economics while continuing to give them the value they uh they’ve come to expect and of, and, and one question, Joe, you know, whenever we talk about integrating all this technology A I automation, you know, the, the natural question is what is gonna mean Joe uh for the men and women working at, at these fast food chains, what will it mean, Joe?
Is this technology gonna displace those folks?
So firstly, at we’re in the people, business, team members are at the core of our success.
And for us, a big part of our responsibility is figuring out how to make sure that we can invest our time and energy and giving them easier experiences.
We talk about easy operations and making such our team members, our restaurant general managers can run their restaurants as simply as possible.
Um We think that this can help them with order accuracy, which doesn’t take away jobs, it can help them with the speed of service.
Uh take a look at our KFC business where back in 2022 a quarter of our restaurants had self-service kiosks uh today, uh over 50% of our 20,000 KFC restaurants have self-service kiosks and why we love this.
It’s win, win for our team members, it frees them up from the front counter so they can focus on more things across the restaurants to give a better customer experience and for our customers, they can customize their hearts out on these self-service kiosks and get what they want and love Joe KFC Taco Bell.
And coming up, one of the season’s biggest showdowns in sports is happening off the court as streaming giants battle for NBA media rights more.
Asking for a trend on the other side, Apple is partnering with Open A I and Elon Musk.
Not happy the Tesla CEO announcing in a post on X that if Apple integrates Open A I in its OS, he will ban devices at his companies.
Musk went on to call the partnership and unacceptable security violation during Apple’s worldwide developers conference.
Keynote Apple announced chat G BT will be available for free in both I os 18 and Mac Os Sequoia.
In a statement open A IC O Sam Altman who appeared at the conference expressed excitement at the partnership noting Apple’s shares, our commitment to safety and innovation.
Elon Musk was among open A is co founders back in 2015.
Remember company’s founding statement warned of the dangers of A I if it were built or used incorrectly.
Just three years later, Musk left open A is board.
He’s since become a critic of the company right now.
The biggest story in the NBA is the finals between the Boston Celtics and Dallas Mavericks.
But the second biggest story would be the league’s media rights here with more is Yahoo Finance’s very own.
Ali Canal Ali, you spoke with NBA deputy commissioner earlier today.
What did he have to say?
Yeah, Mark Tatum, he did decline a comment where exactly talk to today, but he noted the fragmented nature of sports and now how all the leagues are really searching for as much diversity as possible as as many platforms as they can get to reach those consumers.
So we have some interesting comments to say about that.
I want to play a little bit from our interview earlier today.
So over the last 5 to 10 years, sports consumption has been defined by an increase in optionality for the fan and ultra personalization.
And so there are more ways than ever to watch sports programming NBA content.
And what we’re trying to do is make sure that no matter where the fan is that we’re meeting them, where they are, that we’re customizing what they’re seeing, the teams are seeing the players are interested in based on their preferences.
And so uh there’s still very much a role for traditional television.
We very much like the fact that our uh finals are on traditional network television.
Um But we also understand that a new generation of fans are consuming content through streaming platforms.
And so we wanna make sure uh that we have that availability of programming and content across all different channels.
So I, I think what you’re gonna see is more of a hybrid having our games both on traditional television and streaming in an effort to reach all of our fans.
All right.
So that hybrid nature, basically, the more the merrier when it comes to some of these partners.
And that’s exactly what we’re seeing play out in the negotiations.
According to the Wall Street Journal, the leak is close to finalizing deals with ESPN Comcast, Universal and Amazon.
Now, Amazon will be a streaming exclusive package, but notably, this leaves out Warner Brothers Discovery TNT Network, which has carried the game since 19 8940 years.
At the end of the day though, they’re just not paying up and that’s what these other networks are doing and it’s worth content.
It’s viewed as sticky, that’s inflated the rights across the board.
And now you have these tech giants like an Amazon that’s coming in and they can shell out that money.
So, so, you know, analysts said that’s an inherent risk for WBD, but it seems like they’re not willing to cash.
What if Warner Brothers all did not get that deal done and you really did end this relationship, which as you know, more than 40 years.
Yeah, there’s been mixed reviews on the street now for the most part, people say this would be bad because the fact that they have the NBA, it allows them to bid higher for their carriage fees or the rights that other cable networks pay to them.
So if you’re talking about spending upwards of 2.5 billion, that’s a reported amount that NBC Universal is going to pay.
Of course, we have that joint venture with Warner Brothers, Discovery and ESPN and Fox coming later this fall, losing this these rights that could hinder that venture.
So I think it’s going to be a wait and see approach to see if they do lose these rights.
What the lasting impact is going to drama continues.
Be sure to come back tomorrow at 4:30 p.m. Eastern for all of the latest market, moving stories affecting your wallet.