Apple Hits First Record of 2025 as iPhone Optimism Fuels Rebound

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break.

0:37So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens. It's smart, calm and to the point. And it fits into your morning. You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris. On Apple, Spotify, YouTube or wherever you get your podcasts.

1:02Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Looking at the shares of Apple, 52 week high. There's a little bit better feeling, I think, about iPhone sales in particular. So it's kind of helping this story here today. Mandeep Singh joins us. He's our senior technology analyst for Bloomberg Intelligence. Mandeep, what's going on with Apple here? A little bit of a re-rating?

1:40Is it just trying to catch up? Is there a different view that's forming out there on these shares? I mean, I would call it a positive data point after the new iPhone launch. And look, everyone was quite negative about Apple's ability to grow unit shipments. What they're suggesting here is people who are waiting for a new device are upgrading, and especially China is always a focus given, you know, what is going on with NVIDIA. So Apple being a hardware company, you know, being able to sell into China is always a positive and looks like there are positive data points over there as well. So Mandy, what's the attraction to this one?

2:26I mean, I'm sitting here with the iPhone. I don't even know what this is. I don't even know what model I have now. I've got the 16. Thank you. But what's the attraction to this new phone? Why is it doing so much better? Well, so that's why I want to put it in context. It's not as if, you know, at least from my vantage point, we shouldn't be thinking about a big upgrade cycle here. This is normal refresh here. With that being said, you know, they launched a couple of new SKUs. There is a lighter iPhone this time around. So the attractiveness is just people who want to upgrade for a new battery, for a faster processor, probably for a lighter form factor are doing that.

3:08But to my mind, the missing ingredient here is a large angle model running natively on device. And that is where Android still is a better experience when it comes to, you know, the LLM side of things. And Apple has to step up either through their own efforts or through a tie up with one of these frontier LLMs. But there is no doubt that they need more to do when it comes to generative AI. Is there any sense, Nandeep, that Cupertino shares your sense of we got to get going now kind of thing? I think so. But look, I mean, there are two ways to go about it. One is you step up in terms of your CapEx investments, the way hyperscalers have done, you know, whether it's your Microsoft, Google or Amazon or Oracle.

3:58The other is, you know, you take the acquisition route and everyone is sort of thinking, you know, Apple will go the acquisition route or maybe partner with someone like Google now that that antitrust overhang is behind them. So either of those two, I think, should work because Apple still controls the distribution. And look, when it comes to hardware, I am excited about an AR glass form factor. I think they are working on a chip when it comes to these new AR glasses. And there will be relevance of AI when it comes to your glasses form factor. So from that perspective, there is something to look forward to from a hardware standpoint.

4:38They already launched one, you know, AirPod Pro 3 with real-time transcription. That's exciting. So those are the kind of features they would be looking to add. But I don't think they are going the CapEx route in terms of, you know,$100 billion in CapEx the same way hyperscalers are doing. Stay with us. More from Bloomberg Intelligence coming up after this. Hello, I'm Michelle Hussain. And for more than 20 years, I was at the BBC. Military withdrawal from Afghanistan. But all the time I was delivering the headlines, I wanted to go further than the news of the day. To spend more time with the people shaping our world.

5:18And that's what I'm doing here on this podcast. Speaking to people from Nigel Farage. This is love you trying ever so hard. Russia needs to be taught a lesson. This is love you trying ever so hard. To tech journalist Kara Swisher. And the tech industry is running wild. You know, they've gotten what they wanted and they've seen a huge run up in their stock prices. This will be a place where every weekend you can count on one essential conversation to help make sense of the world. So please join me, listen and subscribe to The Michelle Hussain Show from Bloomberg Weekend, wherever you get your podcasts.

5:54You certainly ask interesting questions.

6:00You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's get to another story here today in the luxury business here. Caring, the big company that owns a lot of big brands, I think Gucci as well. They're backing away from their beauty business. They're selling it to L 'Oreal. $4.7 billion. Let's get a breakdown of what's going on there. Andrea Feldstedt, she's a Bloomberg Opinion columnist. Andrea, can you tell us what Caring is doing here, what this transaction shows?

6:36Well, it's being dressed up as a partnership between Caring and L 'Oreal. What it really is is effectively the sale of their beauty brands to L 'Oreal. They've got a new CEO, Luca Di Maio. He's come in at a time when the balance sheet is very stretched. his predecessor, who is now chairman, bought a lot of things, including Creed, this very, very upmarket perfume business, a share in Valentino, to try to make the group less dependent on Gucci. But that really increased debt. At the same time, Gucci's really slowed down and they're having to revive it. So they're saying it for€4 billion in cash.

7:21that gets some money in to deal with the debt and gives the new CEO a bit more time to turn around Gucci. Andrea, isn't this a complete turnaround? I mean, didn't the company want to bulk up the beauty and cosmetics division? Exactly. I mean, they're saying, you know, this is built on the potential that they created. I mean, to be fair, they bought Creed. They paid a lot for Creed,€3.5 billion, which I worked out to be about 14 times sales. It was, you know, an awful lot. But what they did, it had a supply chain. They did that as a platform to build for beauty. And the argument is they have been able to do this deal because of that platform.

8:03That's probably kind of rather generous. Luke Dermott had a big decision to make when he got in. He either had to stick with beauty and invest in it. But with that debt, it's gotten all and the need to reinvigorate Gucci. It's got an awful lot more calls on its cash. So he just decided beauty wasn't a priority. All right. I consider myself a Gucci expert. I read the book. I saw the movie. You saw the movie. Yes, exactly. So, Andrew, I mean, it's obviously an iconic brand. What are the experts saying that needs to be done? Because it's such an important part for caring. It is. It really is. It was at its peak in sort of 2018-19, around that time.

8:44It was 60 % group sales. Now, you know, Kering had an amazing run with Gucci. They put in this quite unknown designer, Alessandro Michele, and the prevailing look had been very minimalist. And he came in with these big logos, clashing print, granny chic, and it was just a breath of fresh air. And it changed prevailing fashion. But that was in sort of 2016. After the pandemic, when obviously nobody was feeling terribly good, soaring inflation, It just felt very out of sync with how people were feeling. And they tried to turn it around and have a much more minimalist look. And it just wasn't Gucci.

9:26Gucci works best when it's very fashionable, when it's over the top. So they brought in Demner Vesalia, who was at Balenciaga. And he is trying to, you know, really revive it. He's gone back to the Tom Ford days when it was very successful. He's gone back to the Alessandro McKaylee days. He did this crazy film in Fashion Week that was absolutely bonkers. But it got people talking about Gucci again. I was in New York a couple of weeks ago, and I went to the store in Soho, and there was a big installation of all his things and a capsule collection. It's trying to get people interested in Gucci again, and he's sort of going back to the future to try and revive its magic.

10:09Whether it's going to work, I'm not sure. I thought he was the wrong person to be appointed. But so far, he seems to be doing all the right things. Andrea, can you tell us some of the challenges Karag has been facing? I mean, there's that slump in Chinese demand, higher U.S. tariffs as well. What are they facing? So what we've got at the moment is the 1 % are still doing very well. But they're not buying Gucci. they're buying Hermes they're buying Brunello Cuccinelli Laura Piana they want these very expensive upmarket things now the rest for the less rest of the luxury market that aspirational customers coming under pressure and Gucci had a lot of those aspirational customers particularly in the US so you've got the sort of aesthetic going out of fashion you've got these aspirational customers coming under pressure.

11:02It's really had a bit of a perfect storm and it needs to really revive Gucci. And it had, Batego Veneta wasn't doing too bad and their designer went to Chanel. So, you know, every brand is sort of, you know, got its challenges. Stay with us. More from Bloomberg Intelligence coming up after this. This is Tom Keen inviting you to join us for the Bloomberg Surveillance Podcast. It's about making you smarter every business day. I'm Paul Sweeney. We bring you complete coverage of the U.S. market open. We cover stocks, bonds, commodities, even crypto, all the information you need to excel. And I'm Alexis Christophorus.

11:44Bloomberg Surveillance also brings you the analysis behind the headlines. We do that through conversations with the smartest names in economics, finance, investment, and international relations. We do all this live each and every weekday that bring you the best analysis in our daily podcast. Search for Bloomberg Surveillance on Apple, Spotify, YouTube, or anywhere else you listen. On the East Coast, listen at lunch. And on the West Coast, listen as soon as you wake up. That's the Bloomberg Surveillance Podcast with Tom Keen, Paul Sweeney, and me, Alexis Christophorus. Subscribe today wherever you get your podcasts.

12:20Bloomberg Surveillance, essential listening each and every business day. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Talking about AI, that's been a theme for this marketplace for seemingly three years now. Not everybody says that AI is going to revolutionize their business. Even McDonald's say it's going to revolutionize how you go through the drive-thru. I'm like, all right, whatever. Just get my order right.

12:56It's also true here in the financial services business. Patrick Daniel joins us here, Vice President, Advisor Digital Solutions at Commonwealth Financial Network. Patrick, is AI going to replace the financial advisor? Absolutely not. What we're seeing today in terms of it, there's an experimentation and a scale that's happening within the AI space in terms of advisors. And we heard that with the robo-advisor years ago in terms of will it replace. And so from an AI capability, absolutely, there's going to be an elevation of the advisor in terms of what they are possible and what they can do in terms of the art of the possible.

13:29But absolutely not. There's going to be a need for empathy. There's going to be a need for understanding human behavior. year. And really, from a technology perspective, that's going to be very difficult to do. Now, with that said, if I were to look into the three to five year sort of glass in terms of what's going to look like, it's going to be very difficult in terms of how that may look like. You might have digital assistants, right, that are paired up with a human advisor that is using hyper-personalized information and services to help the advisor support those clients. But generally speaking, you're not going to see that replaced completely in terms of what a financial advisor can provide their clients.

14:08So the human relationship not dying, basically. So how is AI then changing the way you manage money? So there's just a tremendous opportunity in that space in terms of right now what we've seen over the last two to three years in terms of experimentation has been around client meetings and note-taking and efficiency within the space. And so you're seeing advisors freeing up time to focus more on financial conversations with their clients or asset management. And so what we're going to see in the future as this technology evolves, and we're starting to see it already, is in the space of doing business modeling or financial modeling or looking at it from a model's perspective in terms of where I should be putting from a next best action perspective.

14:49And so we're going to start to see a lot of that in terms of informing advisors to make sure that they're having those conversations in a timely fashion and potentially identifying maybe gaps that if they didn't have, say, an agent or this digital assistant next to them that they could identify in a timely fashion from a tax efficiency perspective or just from a scale perspective or from an asset allocation perspective. You know, when I talk to some of the advisors here at a conference like at Commonwealth, they say, you know, I really want the platform to kind of free up more of my time so I can go out and work with my clients, prospect for new clients, really help me with the back office, help me with the technology, help me with all that.

15:28How are you guys integrating AI into that part of the platform? Yeah, absolutely. So where we started, so first off, before we started from an AI implementation perspective with our affiliates, there's a risk, obviously, right, from a compliance and regulatory perspective. So years ago, we formed an AI or Gen AI risk committee at Commonwealth to try to make sure that whatever we provide from a support perspective as we move forward within the AI space, that we do so in a compliant and make sure from a data retention and a risk perspective that we take care of that. As I mentioned earlier, two years ago, it was more around a curiosity with the technology.

16:05I'd say a year ago, 12 to 16 months ago, it was more around experimentation. And now what we're seeing at Commonwealth, we just rolled out an AI meeting tool, or a couple of them actually, earlier this year, and we're seeing now scale. And that's where I think you're going to start to drive the adoption. So we rolled out a new platform. It's a third-party platform from the AI meeting perspective, we already have 20 % adoption on that. And just folks talking to one another at events like this from a networking perspective, we're going to start to really see that driven in terms of adoption and acceleration within our space.

16:36Now, I see the excitement coming from you when you're talking about AI and all that can do, but what concerns you when it comes to AI in this space? Yeah, there's a lot of things. And honestly, the first thing I think about is just deep connections. And I think about AI, not just generally speaking in terms of from a financial management or in our space, but you think about, and I think about my own personal life where I would call my folks, whether it's my dad on some advice, or I need help with whatever it might be in terms of life. And what I think you're finding a lot now are people are just going to Gen AI or to large language models for that.

17:12And so the face, the face, the deep connections, and that's what really our industry is rooted in. That's what really concerns me in terms of how do you balance from making sure that the human's still in the loop and the technology. And I think there's going to be a way to do that, but that's what really concerns me. It's the connections. It's the people. It's the face-to-face. Well, sure, some people go to chat GPT for financial advice. Well, 80 % of the people that are using a large language model today have actually used it for financial advice. And it's a little bit higher for the younger, the millennials, et cetera.

17:43It's about an 82 % to 83 % adoption of people using it for financial advice. And so, again, that's an opportunity for financial advisors to make sure that they get in front of that and to guide that direction in terms of where they go and how they use it. My number three offspring is in the financial services business. He's at the stage of his career where he is dialing for dollars doing all that basic grunt work. But he finds it as a challenge that a lot of the young people that he prospects come back and say, well, I've got GPT. How do you put that in your training? What's the response to that?

18:13Yeah, so from a financial advisor in terms of when they're having that conversation, yeah. So it's all about guidance. And so, you know, there's an opportunity there, I think, in terms of making sure that you're directing. And that's where the value of the advisor comes in, right? And so it's trying to get in front of that and providing information that's more curated, but also recognizing that there's this other. And that's been in the industry for years in terms of whether it's various websites you can go to, et cetera. It's just getting elevated and more accessible. But I think you just need to make sure that you address it and then you account for it.

18:46And what emerging technology are you keeping an eye on? Oh, yeah. So for me, from an AI perspective, there's a couple of things. One is quantum computing, actually. And so with quantum computing, you're seeing it's a symbiotic relationship, actually. So you're seeing AI improve the quantum computing in terms of what's capable. And then from a quantum computing perspective, in terms of the power and what can be provided, it's elevating the AI. This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 10 a.m. to noon Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app.

19:25You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

19:36I'm Barry Ritholtz, inviting you to join me for the Masters in Business podcast. Every week, we bring you fascinating conversations with the people who shape markets, investing, and business. CEOs, fund managers, billionaires, Nobel laureates, traders, analysts, economists, Everybody that affects what's going on in the market, whether you own stocks, bonds, real estate, commodities, crypto, you really need to hear these conversations. Sometimes it's behaviorists like Dick Thaler or Bob Schiller. Sometimes it's fund managers like Peter Lynch, Bill Miller, Ray Dalio. Sometimes it's authors, Michael Lewis, author of The Big Short and Moneyball.

20:21Regardless of the conversation, these are the folks that move markets each week. That's the Masters in Business podcast with me, Barry Ritholtz. Listen on Apple, Spotify, or wherever you get your podcasts.