The Jobs/Cook Era at Apple, Intel & AI, and Another SaaSpocalype

0:04Travis Hoium:Did Intel become the big AI winner of 2026? Motley Fool Money starts now.

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0:36Travis Hoium:From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Fool Money. I am Travis Hoyam, joined today by Jason Moser and Lou Whiteman. And guys, we are going to get to Intel and some of the implications for artificial intelligence, why this is the hottest stock seemingly in the market right now. But I want to start with Apple and Tim Cook. He announced that he's going to retire as CEO or step down as CEO later this year. And there's been a lot of discussion about Cook's legacy, including on one of the Motley Full Money shows earlier this week. But I wanted to go back almost 30 years to the Jobs-Cook era of Apple.

1:15Travis Hoium:And this is one of the most successful stock runs of all time. Not only did Cook have a phenomenal run as CEO, but obviously Steve Jobs came back, saved the company, came out with things like the iPod, eventually the iPhone and the iPad. The Mac has gone from being this kind of forgotten product in the 90s when I was in high school to now it's kind of the go-to PC for most people at home. So Lou, when you think back on that history and kind of the end of this era, what do you think about as an investor? So I want to be careful here because I think Cook was a great CEO and, you know, regardless of circumstances and I don't want to play otherwise, but it does.

1:57The lesson for me here is a lot of being a great CEO is being the right person at the right time. When Steve Jobs was the CEO, especially when he came out, it was about experimentation. It was about taking big bets. It was about finding, defining products and, you know, introducing them. The famous one more thing where like this was a company that was not just throwing spaghetti at the wall and seeing what stick, but it was one that we have got to try new things. By the time Cook got into the role, it was about stability. It was about maintaining. And we've seen that. I mean, how many years have we talked about, oh, there's going to be an Apple car, there's going to be an Apple TV, because as investors, we were conditioned for jobs in the one big thing.

2:39I think I'm glad those things didn't come. And I think it's funny because I think investors still are sort of waiting for that, like what's next from Apple. But really, Jobs built something amazing by taking huge risks. Cook sustained and built off of what Jobs did by not taking these big risks and not saying, yeah, what the heck, let's do a car. And I think that there's a lot of takeaways there when we kind of assess management at a lot of different companies. You want someone really smart, but you also just want someone who is the right person for the task at hand.

3:13Travis Hoium:Jason, we often talk about founders as these visionary people. I think as Motley Fool investors, we tend to over-index to founders. They tend to be the kind of people that can generate those massive returns. Think about the founders of Google. They are still around. meta. Amazon is a perfect example with Jeff Bezos. Jobs has a different story. He obviously founded Apple, but then he was gone for what, about a dozen years, came back and then was, Lou, I think, put it in a really interesting way, the right person at the right time, but he was also the founder of the company. That just seems like this interesting maturation process that inevitably, if you start a company when you're 20 years old, you're just not the person that you are when you're 35 or 40 or 45.

4:08Travis Hoium:But he still had that founder mentality and that ability to walk into a room at Apple and say, this is where we're going. And you're going to follow me. And everybody just hopped on board. I don't think that was true in the, you know, John Scully area. Yeah, I think you said it well there. You're not the same person at 20 that you are at 35, 45 years old. I mean, typically, most people through life, right, they get some perspective, often build families and have just sort of new life events that give them sort of a different point of view. And it is something to keep in mind. We do love seeing these founder-led businesses, but there are also situations where a founder hits his or her limits, right?

4:48I mean, they can't quite get to that next level. They get to a point where, okay, maybe you need to bring someone in that can take this business to the next level. I mean, something I think about Chipotle, for example, right? I think Steve Ells kind of ran into that situation where it just, he just didn't have what was required to be able to take that business to the next level. Obviously, Brian Nickel did. Steve Jobs, he was one of one, right? I think unique and a larger than life leader. And I think that's just it. He was a good leader and doesn't sound like he was that easy to work with, but I think typically that's the case, right?

5:27I think we've heard the same thing about Jeff Bezos. They demand a lot, but you can tell that what they're doing is the right thing, right? They take the business in the direction it needs to go. And Steve Jobs was one of one, like I said. And I think Apple did a wonderful job with that transition. Tim Cook, I think, has just done a tremendous job. And we were very, I don't want to say skeptical, but the questions were out there, right? We were asking those questions, right? When that transition happened, We were like, oh man, what's this going to be like? But Tim Cook, I think, was the right person at the right time.

6:00Apple was well-established and they needed an operator to be able to take that business in the direction that it's gone. Something Tim Cook has always said that sticks out with me, he's always said, inventory is the enemy, right? He just knew, he's like, man, we got to be moving products. And so I think it's going to be interesting to watch Turner's takeover because he has such a reputation in the hardware side of the business. I mean, he's been with the company forever, right? So he's an Apple loyalist, tremendous hardware reputation. And that really is what Apple does, even as we watch services take up more and more of the business.

6:37So this is going to be an interesting time for us as analysts and certainly for, I think, Apple enthusiasts. Yeah, I'm glad you went there because that's what fascinates me. For all we just said about the right person for the right job, Tarnas looks more than qualified, but he is a product guy. Right. And Jason, I don't know about you, but I don't see them going back to, you know, I mean, I'm sure if there is a new category that they're looking at it, but I have to think that if Ternus had some great idea over the last five years or something, Tim Cook didn't stop them. So I don't think there's just something they're waiting to bust out of the lab.

7:12I wonder though, like having a product guy back in charge, should we expect a shift away from like the minding the ship? And And I don't know if I'd before that or again, I mean, you know, obviously it depends. Hindsight is the key here if it's a great product, but I'm really fascinated what from here just with the choice they make.

7:31Travis Hoium:Yeah. Well, the interesting timing here is that we do have this artificial intelligence moment too. Does Apple just lean into what they have and what they do right now and say, you know what? We're probably still going to have phones in our pockets in 10 and 20 years. So we're just going to continue doing that better than anybody else. Or is this one of those disruptive moments where a new hardware paradigm typically comes around when you have some sort of major technology shift? You know, you have the PC, you have the mobile phone. Is artificial intelligence that? That's a huge question. And this now falls on Ternus, which, you know, you could argue that Cook was not the visionary person.

8:10Travis Hoium:So he maybe wasn't the person to lead Apple into that AI age. but lots of questions about, is this going to be a Balmer era for Microsoft or is this going to be Satya Nadella coming in and kind of going, hey, this is the direction that we're going. I think it requires a lot of imagination too, right? It's like, what is that next big hardware lightning in a bottle moment? I just don't know. I mean, like these phones that we have today are magic, right? I mean, like it just, it gives you access to the entire world and it's quite convenient. You can just put it in your pocket and get on with life.

8:44I don't know what the next thing, I mean, Vision Pro, I know that was, they were like, hey, this is the next big thing. And I test drove one of those Vision Pros and I will say the technology is amazing. Again, it's like magic. I can also tell you, I would never consider buying one because they're just simply not enough use cases, right? It's just, it's not something, I don't wanna walk around wearing one of those things all day. And after about 30 minutes anyway, the novelty kind of wears off and your eyes start burning. So it's hard to figure what is the next step, right? We've seen open AI talk about they're working on some sort of AI driven device, but I don't know what that is.

9:22I mean, what is it beyond the phone? It just, it requires some imagination. And I think once we start to see some of those ideas flesh out, you know, Apple does a very good job of capitalizing on that, right? That whole philosophy of we're not trying to be first, we just want to be best. And so it'll be interesting to see if Ternus continues on that philosophy.

9:45Travis Hoium:The other thing to just point out here from an investment standpoint is Apple is not the cheapest stock in the world today. And that can be a headwind as CEOs take over 34 price to earnings multiple. Cook took over a smaller company. He They also took over a company that was, I remember buying Apple stock in 2009 at less than 10 times earnings after you pulled out cash. So there are tailwinds on that valuation side too that can be headwinds for a CEO that ultimately does impact their legacy, like it or not. Yep. When we come back, we are going to get to what's happening with Intel and the SaaSpocalypse.

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11:11Travis Hoium:Welcome back to Motley Fool Money. AI has been the talk of the market for the last three plus years now, but we're having some really interesting impacts in 2026. You saw the memory shortage has just absolutely exploded memory stocks. And this week, Intel reported earnings and the stock for all of its trouble, Jason, over the past few years, just hit an all time high. One of the things that I thought is so crazy is that the company can't meet demand for CPUs. I thought GPUs were going to be the problem. Then we thought memory was going to be the problem. Now it's also CPUs are in a shortage, but they also sold chips that they had actually written off.

11:50Travis Hoium:So this, they reported basically pure profit. NVIDIA actually went through the same phase a couple of years ago where they had written off some chips and then they ultimately saw demand pull forward from, from AI. How do you wrap your head around all of this? Because it seems like there's, there's just so much money flooding in that anything that any of these hyperscalers or companies building out AI infrastructure can get their hands on, whether it's energy, GPUs, CPUs, memory, they're going to buy all of it. Travis, all you have to do is just say AI, man. I mean, like, remember, all birds, right?

12:22I mean, look at what they did. All of a sudden, they go from being a shoe company to becoming a GPU-ass, right? GPUs as a service. I'm saying that correctly, and I'm not trying to say a bad word here on the show, but GPU-ass. Intel certainly has had its troubles. And it's honestly kind of refreshing to see that they're being received a little bit more positively in the market today. I mean, it was a very respectable quarter. They are capitalizing, I think, on this sort of move. I mean, it's been all about GPUs to this point. And now it's becoming more about CPUs. And that gives Intel the opportunity to capitalize there.

13:05I thought the Foundry business growing 16%, that was eye-catching. It's a hard one for me to get behind. It's not like it's a business that's making a ton of money, but it is good to see that they're able to capitalize on this AI opportunity. I just want to tap the brakes and make sure we realize what Travis is saying, because Intel is old school, right, guys? I mean, I have no hair. I remember Intel from the first dot-com crash. They are now above where they were in 1999, 2000. Wow, right? The thing is, though, it's not the same company as it was there. I love what they're doing. I would point out that it's over 100 times forward sales now, almost like 120 times forward sales now.

13:48Earnings or sales? I mean, earnings. I'm sorry. Yeah, 120 times earnings. Yeah, which is a lot.

13:52Travis Hoium:They are trading for eight times sales, which is still pretty expensive. No, no, no. Sorry, good catch. But just so I don't know what to think now, but cheers to Intel. Maybe we all have second acts like this. Yeah. The other thing that we saw this week is the SaaSpocalypse. I don't know if we're on SaaSpocalypse 2.0, 3.0, 4.0. We're up to electric boogaloo now. This one was driven by ServiceNow. Were things really that bad from ServiceNow that we need to sell off? It seemed like everything even related to software was down, you know, 5 % to 10 % on, I think that was Wednesday. And some of these stocks are getting to the point where you look at them and you go, wait, a price to earnings multiple of 10, 11, 12 for companies that we seemingly use every day.

14:41Travis Hoium:It seems like it's getting a little bit out of whack. It is, you know, that was a big reaction to what I thought was actually a pretty good quarter. I mean, we saw plenty of good things from ServiceNow. They obviously beat guidance, raising guidance. And I mean, I'm sitting here trying to figure out a way to be critical of what the company did. You know, to me, I start thinking about, are you familiar with Jensen Wong's five-layer cake analogy? I believe I've heard it, but remind me. So he basically looks at AI as this five-layer cake. And it's like the five layers are energy and chips and computing infrastructure, cloud data centers, AI models, and then ultimately this application layer.

15:27It's to me, ServiceNow strikes me as a business that plays a role in that five layer cake. It's not a company that's necessarily going to be disrupted by AI, but rather one that continues to benefit from it. And so that's why the reaction I thought was a little bit overdone. done. It just didn't seem like it matched up with the results of the quarter. But, you know, again, it's just such a volatile stretch here with AI. And we're trying to understand exactly the impacts of what it's going to have on all of these different businesses. Some will be disrupted, but I think some are going to take advantage of it.

16:00And I think ServiceNow is probably one of them. Yeah. So, you know, it's funny because if you really want to squint, Jason, so maybe gross margins looking out aren't as good as they were. But again, if that is the SaaSpocalypse, I think we can ride that storm, right? It's funny, guys. I spoke to a CEO this week at a decent-sized company, and I was asked about this, and they said, flat out, nothing has changed in their software purchasing habits due to AI. They hope it will. They're reading these headlines, too, and they'd love to save money, but for now, nothing has happened. I get the thesis here, and I don't think I want to be dismissive of the thesis, but I do think that instead of just throwing it all out each quarter, I do think we should wait to see real concrete evidence, which I think is what Jason is saying.

16:49I will say, if I'm going to pick a bone with this quarter, and maybe guys out of just don't know the business this well, but I kind of feel like, is the Middle East a new weather? Because they did blame the what's going on in the Middle East for for part of the devil. I think maybe they took a punt with that just a bit. And we probably ought to like, I don't know, find them in kangaroo court for that. But overall, if this is the onslaught, I think a lot of these companies can survive that.

17:22Travis Hoium:I do want to point out that there are questions about how the business model could potentially change in a world of artificial intelligence. And I want to use Adobe as an example. They made a shift to software as a service. So remember, we used to buy Adobe products on disks. And then you would just you would own the software forever. You know, maybe you get some get some minor updates, but you would just own that software forever. And they made that shift in 2011, 2012, to the cloud product, the software as a service model that has become so popular in Silicon Valley. And I just want to put some numbers to this.

17:57Travis Hoium:In 2012, their revenue was up 4%. In 2013, it dropped 7.9%. So you're going from selling this piece of software for hundreds of dollars to, okay, I'll charge you X amount per month. That actually had a negative impact on revenue short term. Also had a negative impact on margins. Their operating profit dropped to$422 million that year. But since 2013, revenue has compounded 16%. Operating profit has compounded 28%. So we may be entering a world where the business model shifts from paying per seat to paying for how many tokens you're using, what your productivity is. I don't know whether that leads to a more profitable business, but I think that's something that investors are thinking about and don't know the full answer to.

18:47Absolutely. Usage-based. I mean, that I think is where the puck is headed. And you're right. It's hard to ascertain exactly how that impacts the economics of the business because what was before in sort of a reliable, sort of steady stream predictable, now it becomes a little bit more nebulous. But I guess we will see when we get there.

19:06Travis Hoium:When we come back, we're going to see if these stocks are falling knives or values. You're listening to Motley Fool Money.

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20:50Travis Hoium:Welcome back to Motley Fool Money. In this segment, we like to have a little bit of fun with investing. And I wanted to get an idea with some of these stocks that have dropped recently, especially year to date. Are these stocks values that investors should be looking at today and going, you know, scooping up as many of these as possible? Or are they falling knives where it's just, it's over. And for some reason, the business has completely changed or the market's dynamics is completely, completely changed. And these stocks are not going to recover. Let's start out Lou with Adobe. We all know Adobe.

21:24Travis Hoium:They've got all these professional tools that, you know, people smarter and more creative than I am know how to use. I'm still using Canva. So I'm, I'm the other side of the ledger, but it does seem like a very sticky product. And yet, the stock has done absolutely horribly. In the past five years, the drawdown is currently at 65%. That's from its high late in 2021. But the valuation, you're looking at on a forward basis, price to earnings multiple is just 10.8. Enterprise value to sales is 4. You look at their financials, it doesn't look like they're being disrupted when you continue to grow revenue at double digits.