Gene Munster from Deepwater Asset Management discussed the recent developments from Meta and Apple, noting that while Meta’s stock has seen gains due to AI integration across its platforms, the updates were more incremental than groundbreaking. He also expressed optimism about Apple’s upcoming iPhone cycle, predicting a growth rate of 10-15% for fiscal 2025 driven by a significant upgrade wave and new features.
In a recent discussion, Gene Munster from Deepwater Asset Management shared his insights on the latest developments from Meta and Apple. He expressed surprise that Meta’s stock has maintained its gains despite what he described as a lack of substantial announcements during a recent event. Munster emphasized that Meta’s focus on integrating AI across its platforms, which boast over three billion daily active users, is crucial for driving engagement. He noted that the most significant announcement was the introduction of AI features for Instagram and WhatsApp, although he felt the overall updates were more incremental than groundbreaking.
Munster highlighted the importance of Meta’s vision for the future, particularly regarding AI glasses, which he believes could see hundreds of millions of units sold. He pointed out that while current sales of Meta’s Quest headset are relatively low, the company’s commitment to wearable technology is a significant step forward. The stock saw a slight increase following the announcement of their Orion project, which is expected to take three to five years to materialize, indicating investor optimism about Meta’s long-term strategy.
When discussing the stock performance, Munster justified the 60% increase in Meta’s stock year-to-date, attributing it to strong earnings growth and an increase in the company’s valuation multiple. He believes that the full benefits of AI integration have yet to be realized, and as these features become mainstream, there is potential for further upside in earnings, particularly in 2025. Munster emphasized that AI’s ability to enhance user engagement and content creation will be pivotal for the company’s future success.
Shifting focus to Alphabet, Munster expressed confidence in Google’s ability to navigate regulatory challenges while maintaining strong performance in its search business. He noted that Google’s generative search capabilities, particularly with the integration of Gemini, are showing promising results. Munster believes that for any competitor, like OpenAI, to significantly disrupt Google’s search market, they would need to offer a product that is substantially superior, which he does not foresee happening.
Finally, Munster shared his perspective on Apple’s upcoming iPhone cycle, predicting a growth rate of 10-15% for fiscal 2025, which is higher than the market’s expectation of around 7%. He attributed this potential surge to a significant upgrade wave as many users are due for an upgrade after an average of five years. Munster believes that the combination of a favorable upgrade cycle and new must-have features will drive demand for the iPhone, positioning Apple for strong performance in the coming years.