Zinger Key Points
- Gerstner announces that he bought Apple stock, believes integration with OpenAI goes "deeper" than what the company is saying.
- "I think all of these leading players as a pack will outperform a lot of the rest of technology," Gerstner says.
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Altimeter Capital founder and CEO Brad Gerstner is becoming more bullish on Apple Inc AAPL as the company unveils new AI-powered features at its annual developers conference this week.
What To Know: Tuesday on CNBC’s “Fast Money Halftime Report,” Gerstner announced that he bought Apple stock ahead of the 2024 Worldwide Developers Conference (WWDC). Given Apple’s positioning in the premium consumer space and OpenAI’s first mover advantage, he’s bullish on what could come from the newly announced partnership.
“I suspect that the integration going on with OpenAI is deeper than what we heard about yesterday,” Gerstner said on the show.
While Apple has said it’s open to working with multiple AI partners and has seemingly left the door open for Google, Gerstner believes Apple’s AI ambitions are all about OpenAI. He called the partnership a “natural coming together” and noted that other tech executives were absent at WWDC, while all of OpenAI’s management team was present.
Gerstner told CNBC that he believed Apple’s place in AI was to offer AI services and provide a privacy layer and interaction layer. He suggested that the company confirmed that on Monday when Apple positioned itself as a gatekeeper for AI.
“Only 5% of Apple users today can access Apple intelligence so they’re going to have to upgrade these devices in order to play,” Gerstner said.
Gerstner noted that he’s not necessarily betting that Apple is going to be the winner in the AI race, rather that the company will be one of the key players in the hunt.
“I think all of these leading players as a pack will outperform a lot of the rest of technology … I think Apple is among the group, including Tesla, including Nvidia, including Google, including Meta, including Amazon, that will net benefit from this because I think scale advantages in data, scale advantages in capital really matter in the age of AI,” Gerstner said.
Related Link: 7 Apple Analysts Mixed On WWDC 2024: iPhone Upgrade Cycle Coming, But When?
Gerstner was buying Nvidia Corp NVDA stock in late 2022 when many market pundits were predicting a stock market crash. He continued buying the stock in early 2023 even after it soared as ChatGPT took the world by storm, adding users at an unprecedented pace.
At that time, Gerstner predicted that an “AI supercycle” was on the horizon. So far, it looks like Gerstner was right. Nvidia stock closed at $217 pre-split the day Gerstner came on CNBC last year and predicted that Nvidia would outpace Street estimates in the back half of 2023 and beyond. Despite the stock being up more than 500% since that time, he continues to expect Nvidia shares to Outperform in 2024 and into 2025.
“Remember, I was on when the stock went to $250 and everybody said sell, and then the stock went to $400 and everybody said sell. Why? Because it went up. They weren’t doing the work on what was also going up, which was revenue and earnings,” Gerstner said.
Apple is not due to report earnings again until early August. The company is expected to report earnings of $1.33 per share on revenue of $83.772 billion. Nvidia is due to report sometime in late August. Analysts currently expect earnings of 63 cents per share on revenue of $28.382 billion, according to Benzinga Pro.
AAPL Price Action: Apple shares were up 6.08% at $204.86 at the time of writing, according to Benzinga Pro.
Photo: Shutterstock.
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