Apple’s WWDC On Deck… And A Jobs Report Head Scratcher 6/6/25

0:02Live from the NASDAQ market site in the heart of New York City's Times Square, this is Fast Money. Here's what's on tap tonight. A make or break moment for Apple. The company getting ready to kick off its worldwide developers conference. Can next week's event impress investors and get the stock back in rally mode? We'll debate that. Plus, deal or no deal? U.S. officials set to meet with their Chinese counterparts in London on Monday. Can the two sides come to a deal on trade? And what could it mean for the markets? And Tesla's rebound loses steam even as the dust settles in the Musk Trump feud.

0:32Lulu's big lemon a day after earnings. and energy stocks get energized. To wrap up the week, is this the start of a longer-term rally? I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Bono & Eisen, Courtney Garcia, and Steve Grasso. And we start off at the countdown to Apple's Worldwide Developers Conference kicking off Monday, 10 a.m. Pacific time. Expectations seemingly lower going into this event. The company last year unveiled Apple Intelligence, but hasn't fully delivered on what was promised. Shares of Apple rising over a percent and a half today to lock in the stock's first back-to-back up week since mid-February.

1:06Still, the tech giant is down almost 19 % this year, thanks in part to its lagging AI strategy, tariff fears, and a murky outlook for the second half of the year. It shed over$700 billion in market cap this year alone. For more on what to expect next week in Cupertino, let's bring in Steve Kovacs. Steve. Hey there, Mel. Yeah, Apple's developer conference does kick off on Monday, coming at the midpoint of a bruising year for the tech giant so far. Apple's facing numerous threats, perhaps more happening at once than at any other time during CEO Tim Cook's tenure. Shares are down around, like you said, 18 percent year to date.

1:42So WWDC is Apple's chance to have a reset moment and show investors it has a path to get things back on course. But it's all with the backdrop of numerous challenges. Let me give you a quick recap of what's been going on this year. President Trump's tariffs and the trade war, of course. Most recently, Trump threatening new tariffs on Apple products at the end of this month if they're not made in the United States. And then the failure to execute on artificial intelligence after revealing Apple intelligence system at last year's WWDC. Most notably, it indefinitely delayed the AI update to Siri.

2:15In April, court forced Apple to allow apps to accept payments from the Web, skirting apps for fees. Apple is appealing that case, but major apps like Spotify and Amazon Kindle, well, they're already taking advantage. And then there's the Johnny Ive defection to OpenAI. The design guru behind the iPhone now says he cracked a code for a unique AI device that will wean us off smartphones. While you shouldn't expect Apple to address any of those issues directly, investors are going to be watching WWDC for any hints at a path forward to mitigate them, Melissa. In terms of the perception, the narrative that it's behind an AI, last year, obviously, that was what set the stock on fire for some time.

2:56This year, is there anything that can change the narrative in terms of announcing a partnership with a different AI chatbot or anything else that can sort of revamp that or reignite that? Yeah, so last year when Apple Intelligence was announced, Melissa, they did announce that ChatGPT integration and said, by the way, we're going to open this up eventually to other AI models. They, in fact, called out Google's Gemini model by name. So it's possible they announced that partnership is ready. That could help things a little bit, kind of fill in the gaps. And then last month, Eddie Q, he's the services boss over at Apple.

3:30He was testifying in that Google antitrust trial, and he said Apple is actually looking at perplexity. That's the AI search engine startup, which already has deals with phone company Motorola. They're rumored to have a deal with Samsung. And so that could also help as well, plugging it into Siri until Apple can get Siri updated the way they promised us they would last year, Mel. All right, Steve, thanks. I know you're headed there. Safe travels. Steve Kovach. Thank you. All right. Can any of these things reignite the shares and or justify the 28 times forward multiple, Tim? I doubt it. But again, we've been surprised before.

4:07I think the bar is so low, has been noted. And I think the dynamic with China is something that, if anything, maybe there's a little bit of positive here in the last couple of days in terms of overall China trade. The competitive nature for Apple in China, I think their best days are behind them. I think their best days for them in AI or Apple intelligence are ahead of them. And I think that's part of why I'm relatively bullish. I hate the valuation. I think some of the concerns on the regulatory front are overdone. I think the dynamic around services, the dynamic around where we're going to be, ultimately the way they are going to be, how AI is distributed amongst, I think, most people in the world.

4:41I still believe that. I own the stock. I don't expect much. The best days of Apple intelligence have to be ahead of them. Because there haven't been any days so far. Okay, bring it. Bring it on. But that's kind of my point, too. How much do you wait in a 28 times forward multiple stock for those days to come? Yeah, so here's where I think Apple was dumb like a fox. What's the saying? Something like that. But when you look back, I have no idea what you're talking about. Sly like a fox. It's supposed to be an ironic thing. So if you go back to the Deep Seek headline, the rest of the MAG7 names traded off precipitously lower.

5:21Apple was up 2 % to 3 % within the first week and outperformed a month out. What kills Apple is China, tariffs, Trump talking about making the product here. But everything that killed the others is Apple's strength. They haven't invested in AI. So that's their tailwind, that they haven't spent$86 billion. They could just do sort of a plug-in for AI with perplexity. That's where I think you're going to get a tailwind. And so negative the story has been, I think it's due for a bounce. Yeah, I tend to agree in terms of your patience, in terms of them being able to deliver on Apple intelligence because they haven't had the robust CapEx spend.

6:03I think if we're in this situation and they still hadn't been able to deliver and they had spent 50, 60, 70 billion dollars, then I 100 % absolutely agree. Like there's really not much upside there. The other thing is like the tariffs and local manufacturing, these are all challenges that everyone else is also facing. There is some idiosyncratic risk in terms of them not being able to really lean into the India build-up that they had. That was kind of like their first pivot. So there is some idiosyncratic risk, but we're all dealing with the whole tariff thing. I think what you want to see out of this WWDC conference is them addressing developers.

6:38Because the ruling about processing and fees and fee circumvention for developers, they still need to establish themselves as being the preeminent place where developers come and where they can continue to have that service engine on that robust user install base. I think that's really the one thing. I think anything else as it pertains to Apple intelligence is likely upside for the reasons that we all stated. And they're going to have to do that at some point, right? I mean, realistically, you're going to have to stay up with the times because it will go by the wayside. I mean, BlackBerry used to be the phone we all had, and then Apple came in.

7:10And if they don't have some sort of artificial intelligence, you're going to see someone like an open AI who makes that AI device, and it could take over. And that's really what investors are a little worried about. When you look at it and its valuation, I mean, Apple trades about 28 times next year's earnings, which isn't that dissimilar than NVIDIA, like 29 times. When you look at sales going forward, it's like four times sales growth over the next 12 months for Apple versus like, what is it, 40 something times for NVIDIA. I mean, it's a huge discrepancy. So when you're looking at slowing growth, they're losing share in China.

7:38They don't have an AI story. They have to get that at some point or their valuation isn't going to be justified. Services is growing at 23 percent. In the last couple of years, it was only growing at 10 percent. By the way, it's crazy like a fox. That's what I was thinking. All right. So services is probably. I would not have even gone back to it. I mean, we'd move past that one, Steve. Let it go. I wanted to prove that I could recapture it seven minutes later. It's going to happen. A completely non-appropriate. Non-sequidor. Non-sequidor. But services is what you're paying for Apple and the$2.35 billion installed base.

8:10So it's a utility. It's what? It's a utility. It could be a utility, but I think they haven't wasted money. To Bono's point, they haven't wasted that money yet. So eventually when they do it, it's going to be a hell of a more efficient spend than the others have. Could we be at a BlackBerry moment? I mean, I don't want to say that we are or that if we're at a BlackBerry moment for the iPhone, then then there's a lot of other moments. There's a lot of other technology and hardware out there that we're at a BlackBerry moment for as well. I mean, you can't tell me the move to the small screen is over.

8:39And in fact, I think the Johnny Ive news is a total, I think it's total overreaction if, in fact, you think this is the beginning of the end for Apple. There's no question if I also look at all the other market cap increase, look at the Mag 7, all the other names, for the most part, outside of possibly Google certainly had some issues as well. But you can't tell me the fact that we haven't priced in any AI into Apple in a market where their mega cap peers have. And ultimately, I think it has to go through Apple. That's positive. It's not negative. And at this point, it's in the price. You know, there's been several wearable devices, you know, whether it was the pins or the badges that they tried to come out with.

9:17The broach. The badges? No, I'm kidding. What are you talking about? Like the wearable pin. The pin? Oh, really? I didn't know. I think a pin or not a writing pin, a wearable. Well, that's the Johnny I've clipped. It's supposed to be like some kind of broach. But there's been other iterations of this. I don't wear broaches anymore. But when I did, I mean, I can imagine what my Apple one would. Yeah, anyway. It would be cool. Yeah. Yeah, point being, I do think there is some truth to eventually all of these AI functions are going to be much more integrated into us as the individual person. And so to completely discount that, I think perhaps is swinging too far to the left.

9:52Do I see it being an imminent threat? So is it a REM moment really is what we're getting down to. I really don't think it is. If so, to Tim's point, you've got to be looking at social media. You've got to be looking at a whole swath of things that essentially use this phone, smartphone, as their engine for operations. For more on what to expect out of WWDC, let's bring in Craig Moffitt, partner and senior managing director at Moffitt. Nathan said he's got a celebrating$141 price target on the stock. That is the lowest target among analysts tracked by FactSet. Craig, it's always great to get your take on things, all things Apple especially.

10:27Good to see you. the expectations going to WWC are so low. And at the same time, that is sort of the table setting for a nice upside surprise. I'm just wondering, is there anything that could come out of this conference in your view that could at least allay the fears that Apple is completely behind in AI? Yeah, I think so, Melissa. I agree with what your panel has been saying, that the expectations are really low. And so that is obviously a better setup than the other way around like we had last year. What I would say, though, is the one thing that I haven't heard anybody discuss is if you end up having to partner with, say, a perplexity or if you go off device to a cloud-based solution like open AI.

11:17Just be aware that the problem with that is that takes off the table, the upgrade cycle argument that has been really the driver of the multiple for so long. So, you know, remember when they came out of the last WWDC last year, the argument was that in order to do agentic AI on your device, you're going to need at least eight gigabytes of memory and you're going to need a neural processor for AI. And therefore, you're going to have to upgrade your device and it's going to accelerate iPhone sales. You don't need an upgrade if you're going to do all of that in the cloud. And I think there is real pressure on Apple to find a solution and very likely it's going to have to be a cloud-based solution.

12:03The other extreme isn't good either, right? That is the DeepSeq type of model that is so small that it can operate on the device without an upgrade either. So they're trying to thread a needle, which is it needs to be sufficiently demanding of the device that you have to upgrade your device, but not so demanding of the device that they fall behind what can be done in the cloud by their competitors. And it's a very, very tight window that they're trying to get through here. So Craig, I like your call. I like when you really put it out there being the lowest on the street because that's really differentiates yourself from the street.

12:42But when you look at the headlines coming out of Deep Seek, where they were literally had a tailwind behind them because the lack of spend, I get what you're saying, but the longer they lag in AI, that's a time decay. You would think that they're due for some sort of success. And I always believe that the upgrade cycle is about the camera. The camera's easier to improve than the rest of the phone. Well, look, if the camera's the upgrade cycle, it's hard to imagine that you get to the accelerated upgrade cycle. And one of the, you guys have all been talking about the challenge posed by the high multiple.

13:19If you're going to put an upgrade cycle into the multiple in your terminal growth rate assumption, you're assuming that it's not a one-time cycle, but that you're permanently accelerating the rate at which people refresh phones. And it's been declining now for almost a decade. So you really have to change the way people think about upgrades. And it's going to take something pretty dramatic, I think, to say, no, I need to now start thinking about upgrading my phone every two or three years instead of what it's up to now, which is pushing four. So the camera's probably not going to do it. I'm not sure whether I agree that being late to the party in AI makes it necessarily more efficient.

14:06Because the challenge you get is that Apple's would-be competitors in AI and the agents that are out there are starting to define the game in ways that may not be advantageous for Apple. The other bull case for Apple, I suppose, is they develop an agent that you pay$20 a month for and that it's just part of your services revenue for Apple. The problem with that is you have people like Manus that are developing their agents and others that are developing agents. And if the agent development goes on without Apple for too long, there is a very real risk that that becomes a business that is paid for by advertising and isn't subscription-based.

14:46or you have all these different companies with different agendas. I think Meta would say they don't want it to be subscription-based. They want it to be advertising-based, probably Google the same. So you have a lot of deep-pocketed players that are trying to aim at the same space with very different agendas. Craig, thank you for your time. Great to see you. My pleasure. Good to talk to you. All right. So let's say that that upgrade cycle is, you know, muted, let's say. There's no reason to upgrade because you don't need a new phone to operate whatever they have on the phone right now, which is not Apple intelligence.

15:21What is stock worth? Oh, boy. Well, if we're calling it a stock, are you assuming an upgrade cycle based on AI? I'm assuming that there is a traditional upgrade cycle. I'm assuming that the AI is not the end all be all. I think people are going to continue to upgrade their phones. And I continue to think that a lack of penetration of AI apps out there. There hasn't been a major engagement with the developer community on AI apps. And when they do, and that's part of what's going on here, it's going to go back through the iPhone. And it will lead to more, I think, software and services revenue. So I'm not – nobody's priced in a crazy upgrade cycle.

16:00Well, and I think that's why it's come down from its highs, right? Because everyone was excited about this upgrade cycle that they promised everyone. one. And that's why you got more sales of this iPhone saying, oh, if you buy this one, like, don't worry down the line, we're going to have some AI, which hasn't happened. And now you're seeing the valuation has come down somewhat on that for that reason. So, yes, I mean, that that if that super cycle happens, that would increase it if it happens. I think that's the question we're all trying to figure out, which we're losing hope. All right. Meantime, a date has been set for the next round of trade talks between the U.S.

16:27and China. President Trump posting on Truth Social this afternoon that representatives for the two countries will be meeting in London on Monday. This after a report that China had granted rare earth licenses to suppliers of the three big U.S. automakers. For the latest, let's bring in Eamon Javers. Eamon. Hey there, Melissa. Yeah, we know where, we know when, we know who. It's going to be Besant, Lutnik and Greer representing the U.S. side in London on Monday. What we don't know is what they're going to be talking about. The president in the Oval Office yesterday hinting that there had been some agreements discussed between himself and Xi Jinping on that phone call that they had early Thursday morning, but not giving any detail as to what exactly they discussed.

17:12The president suggesting that that needed to be finalized by staff in a follow-up meeting. This will be that follow-up meeting in London. So the question for Wall Street is going to be, do they paper some kind of a deal here, even on minor elements that can give you a sense that they are getting traction on some of these trade items? Or is this a meeting to have a meeting and you walk out of it on Monday afternoon with no major headline suggesting that any progress had been made? I think that's what investors are going to be watching for. It's certainly what folks in Washington are going to be watching for as they monitor that development in London, Melissa.

17:45But as of right now, we don't know what the items were that the president suggested might be close to the line here. So we're all going to have to just watch and wait. Eamon, was there any language out of the White House yesterday that that would point to a deal having been made on any level? You know, the president said we have a deal and we're going to finalize that deal. But, you know, if the deal is not finalized, you know, do you really have a deal? Right. And then why are they meeting on Monday if there's a deal? Right, exactly, exactly. And he's often said, you know, we have a deal and that deal is the tariffs I put in place and they're on pause right now.

18:23And if they want to go back to that deal, they can go back to that deal. Right. So the president is saying he's willing to go back to the higher tariff levels if they don't get some kind of agreement here. But it's clear nothing's finalized or else the talks wouldn't be ongoing. Right. Yeah. All right. Eamon, thanks for clarifying. Eamon Javers, have a great weekend. You bet. All right. So things are very much up in the air. There is no deal or there is a deal, but it's not the deal that the markets want, which is why we didn't react at all yesterday. But that's every deal we've had so far in tariffs has been a deal.

18:54But it hasn't really we don't know what the deal is. And it hasn't really been a deal that was fully structured. And I think I think the deal that was announced by the president yesterday was something along the lines of rare earth. We have some accord. We have some place where we see some progress. There was a discussion. Those are dynamics that I think, first of all, I think communication and the building of dialogue is important. I think leading to the fall of key staffers, she and Trump should not be the people cutting this deal anyway. And I think that's exactly where we're going. I think that's what we got yesterday.

19:27And it's consistent with how the White House and the president have talked about deals. If you look at it, as long as the dialogue continues, it's positive for the markets. As long as neither side says, I'm done talking, if that happens, the market's down 3 % to 5%. As long as there's an ongoing dialogue, that's positive. Positive or market neutral? It's positive. Okay. Yeah, I think it's positive because we factored in a lot of the negativity. But watch MP Materials as your barometer to all this because it was up for two days out of five, up 10%. Because no rare earths were coming in. Exactly.

20:00It's like always the inverse of whatever's happening. So now all of a sudden, if you start to see those rare earths, that comes down. But if you really think about it, Mountain Pass is the only rare earth in the United States. So this company is valuable regardless, but it is going to be extremely volatile with these talks. This feels like a game that I play with my young kids called Hokey Pokey. Your kids are three and basically just born. Three months and two years. Two years. Which clearly is plenty of... And sorry, that game is Hokey Pokey. pokey, where you stick a foot in and then you put the right foot in, the left foot out.

20:34And I'm just wondering, like, if you continue to put a foot in and pull a foot out, are you actually marching forward? And to me, it seems the answer is no. How many times can we continue to go to the same well where, you know, OK, well, we're making incremental progress. We have something we we weren't talking. OK, this actually isn't constitutional. The tariffs must be paused or now that now, you know, You're handicapping my ability to negotiate. To me, it just feels like a bit of us running around in circles. Hold on. That's DuckDuckGoose, though. Oh, sorry. You do the hunky-poking and you turn yourself around.

21:08That's what it's all about. Oh, that's what it's all about. That's DuckDuckGoose, though, I feel like. Well, listen, it sounds like we're playing all the games. That's crazy like a fox. We're playing all the games right now is the point. It's not working. No. No. All right. It's not working. Coming up, a Tesla turnaround. What is next for the hard-hit EV maker as the stock recovers to some of yesterday's big losses? The long-term impact of the knockdown drag-out brawl between CEO Elon Musk and President Trump. Plus, we're taking a look under the hood. Robinhood already doubling in 2025. What is next for this high flyer?

21:41Next, more Fast Money right after this.

21:52Welcome back to Fast Money. Tesla attempted a comeback, stalling out after its worst single-day market cap loss in history. Yesterday's drop fueled by a firework-filled online feud between CEO Elon Musk and President Trump. Tensions have cooled somewhat since, with Musk even agreeing with the post from hedge funder Bill Ackman calling for the two to reconcile. Still, the stock recouped less than a quarter of what it lost yesterday and clocked its worst week since October 2023. So what do you make of this somewhat anemic rebound, Tim? I think before we got into yesterday's game of mutually assured destruction, it was a case where Tesla had traded from 360 to 320 into yesterday.

22:33Even before, I mean, you could make some maybe some of this was bubbling up. We already knew he was there was some discontent. But yesterday's fireworks weren't the beginning of this pullback. And I think you take this back to even Elon, even before he joined the government. So, you know, take it, try to look at the company in the context of before he joined the government, before he left the government. And I think you're left with a company that a lot of people are questioning, really, whether there is a whole lot to the valuation that's much beyond the hardware. There is absolutely something is is is driverless.

23:03All it's supposed to be. I'm not so sure to me it's a valuation call. markets catching wind of that. Yeah, and that's really what I think investors want to see here is some sort of like self-driving vehicles, the robo taxis, which we might get some news on here soon. So I think that's what people really want to see, because clearly you're not buying it at this kind of valuation just because it's a car company. I mean, it trades almost 140 times forward earnings. But I think the trouble comes is that that full self-driving, a lot of that will take government regulations. And if he's no longer in as much with the White House, is that actually going to go through as much as people thought?