In another installment of Yahoo Finance’s Good Buy or Goodbye, he’s joined by RSE Ventures co-founder and CEO Matt Higgins. Joseph Lipton to share his insights on iPhone maker Apple (AAPL) and chip company Arm Holdings (ARM).
Higgins mentions Apple stock as his good buy, stating that the technology leader may be on the rise after the stock fell in the first quarter of 2024. Higgins points to Apple’s rapid adoption and integration of AI into its devices as an important catalyst.
“They’ve been gobbling up under-the-radar AI companies; I think they bought 32 of them,” Higgins says. “They’re working on it because if they don’t, they face an existential threat to their survival. I think Apple has kept its head down while its stock has faltered.”
Arm is the stock Higgins would like to call a good buy, calling the semiconductor designer overvalued as early investors were “looking for different ways to chase Nvidia (NVDA)” in the broader chip landscape.
See more of Good Buy or Goodbye here, or watch this full episode of Market Domination.
JOSH LIPTON: There’s a very noisy universe of stocks out there. Welcome to Good Buy or Goodbye. Our goal is to help cut through that noise to navigate the best moves for your portfolio.
Today we look at the artificial intelligence landscape and how the rise of AI extends beyond the semiconductor industry. Let’s bring in Matt Higgins, co-founder and CEO of RSE Ventures.
Matt, it’s good to see you. So make your first purchase here, Matt. Now, it’s a name that some investors have been a little skeptical about so far this year, they have their concerns.
It’s Apple. Yet you say this is yours. So let’s review the reasons. First, you say Apple is moving forward with AI acquisition. Walk us through it.
MATT HIGGINS: Yeah, first of all, I’ve been very hard on Apple this past year and said, what are you doing? You use Siri. And it feels like those from the 1990s are calling and wanting their phone back.
The story continues
But Apple could be in stealth mode. They have been gobbling up under-the-radar AI companies. I think they have bought 32 of them.
And clearly, they are working on it. Because if they don’t, they face an existential threat to their survival. So I think Apple has kept its head down while its stock has faltered.
JOSH LIPTON: That’s a good point. Because Apple isn’t often known for its big splashy acquisitions. But they do make a lot of small acquisitions. The next point here is that you say that iPhones with built-in AI are on the way. And you think that will attract those breeders?
MATT HIGGINS: Yeah, there’s an incredible catalyst coming. So if you compare Apple to the Magnificent Seven, it’s been like the evil one, if you’re a shareholder. So it’s terrible. S&P rose 25%. It has been flat for a year.
However, Apple, at the end of the day, has data. It has proximity to the client. If you think about using ChatGPT, it is an unpleasant experience. You want to be able to access your phone.
Therefore, they can go directly to the customer. They have a 50% market share in the United States. So it makes sense that Apple dominates. But the most important thing is that it will have a catalyst on June 10. It’s the developer’s conference.
JOSH LIPTON: That great software program. And finally, another point here. Could it provide the fastest path to AI adoption? What do you mean by that, Matt?
MATT HIGGINS: Yeah, once Apple releases something, everyone pays attention to it. So they haven’t had that cool feature that has made you lean towards their update cycle. But they have a new phone on sale, the iPhone 16, a new update, iOS 18. So if they do this right, which I think they will, instantly everyone will integrate AI into their lives.
No, we heard this argument from some Bulls, Matt. And it’s good, as AI moves from the data center to the edge, Tim Cook controls the software, hardware, and chips whenever he wants. He can move very fast.
MATT HIGGINS: Exactly.
JOSH LIPTON: Finally, what’s the risk of this call, Matt?
MATT HIGGINS: Very good. Well, then I’m a lawyer. I do not practice. I graduated from law school. So I’ll put on my lawyer hat. This is a terrible case.
Now, however, I could be wrong. The Department of Justice comes next. Apple says it has a monopoly. I think it has a lot of dominance in the market.
But it is not a monopoly. But you never know. So that’s a risk.
JOSH LIPTON: Okay, let’s continue here. Apple, we know you like it. Let’s talk about when you don’t like it, which is the arm.
This one, Matt, you’re telling people to avoid. Let’s review the reasons. One is simply valuation.
MATT HIGGINS: Yeah, look, I participated in the IPO. She was happy to accompany them. She opened at $55.
It shot up to 140. But at the end of the day, Arm was relatively early to the AI attack. People were looking for different ways to go after NVIDIA.
As the market becomes more sophisticated, they’re starting to realize that, wait a second, Arm is priced too high compared to its peers. 100 times future earnings. There are simply much better ways to play it. So I’m not a buyer here at this price.
JOSH LIPTON: And your second point, we were talking off camera, Matt, about this. Really what you’re saying here is, in your opinion, that Arm is kind of a commodity, in your opinion, compared to his rivals.
MATT HIGGINS: Right. So it doesn’t have a pit. Most people don’t have a moat. But in this case, some have a tremendous advantage in Taiwan, the NVIDIA semiconductor, which is not Arm. Arm sells microprocessors, it is an IP enabler.
But at the end of the day, they have no pricing power, as evidenced by the fact that they can’t get Apple to pay more than $0.30 to license their microprocessors. They have no pricing power. That limits its advantages.
JOSH LIPTON: And the last reason you would avoid this one, Matt. You’re baying you’re asking the arm to follow NVIDIA’s lead.
MATT HIGGINS: Yeah, I’m baying it’s gone up because of the frenzy. The AI phenomenon is very real. You will make a lot of money in the long term. But as the customer becomes more sophisticated, the market becomes more sophisticated, they will look for better ways to take advantage of it.
The reason I think it has held up well is that SoftBank owns 89% of Arm. So what happens if SoftBank gets fed up and needs liquidity and starts dumping those stocks to be careful?
JOSH LIPTON: Yeah, concentrated ownership. And finally here, Matt, same question. Where could you go wrong in this case? What is the upside risk?
MATT HIGGINS: Yeah, two things. First, Google just announced a partnership with Arm. It will lean on Arm to move forward and try to create an NVIDIA competitor. I do not buy it. But it is possible.
And the second thing, it may take some time for the market to realize that Arm is, in fact, overpriced. Then maybe you have some time to move on.
JOSH LIPTON: All right, Matt, let’s summarize all of this for the viewers right now. You’re telling investors to buy Apple because it bolsters its AI capabilities through acquisitions. And its influence could drive consumer adoption of AI on an unprecedented scale. On the other hand, however, you’re saying to avoid Arm, as it’s overrated and more commoditized than its rivals. And property, only to concentrate on commerce.
Thank you very much for watching Good Buy or Goodbye. We’ll bring you new episodes three times a week at 3:30 pm ET.
Keynote USA News
Besides Apple News, You can get Cars | Gaming | Smart Phone | Other Tech and Reviews. So, Follow Keynote USA News on Twitter, Pinterest, and Google News.
