More open-source AI is good for Apple, says T. Rowe Price's Dominic Rizzo

Dominic Rizzo from T. Rowe Price discussed the potential impact of tariffs on inflation and emphasized that they seem more like a negotiating tactic, maintaining a cautious outlook on the tech sector. He highlighted the benefits of open-source AI for Apple, predicting that advancements in AI and digital semiconductors could drive significant growth in the industry, particularly for companies like Apple, Nvidia, TSMC, and AMD.

In a recent discussion, Dominic Rizzo, a portfolio manager at T. Rowe Price, shared insights on the impact of tariffs and the evolving landscape of technology, particularly in relation to Apple and the semiconductor industry. He noted that while tariffs could potentially influence inflation by 20 to 60 basis points if fully implemented, there are various offsets, such as the appreciation of the US dollar and companies absorbing some of the tariff costs. Rizzo emphasized that the current tariff situation appears more like a negotiating tactic rather than a significant threat, leading him to maintain a cautious but not overly concerned stance regarding its impact on the tech sector.

Rizzo highlighted the attractiveness of digital semiconductors, particularly amidst ongoing debates about the implications of advanced technologies like deep learning on the semiconductor ecosystem. He pointed out that advancements in deep tech could increase the likelihood of a substantial AI chip market, projecting growth to $400 billion by 2027. He believes that innovations in training models more efficiently will drive demand for compute-intensive technologies, making companies like Nvidia, TSMC, and AMD appealing investment opportunities.

When discussing Apple, Rizzo noted that the company stands to benefit significantly from the rise of open-source large language models. He argued that these high-quality models could enhance Apple’s artificial intelligence capabilities rapidly. This improvement in AI is crucial for Apple, especially as the company seeks to boost its iPhone sales, which have been positively correlated with the integration of Apple intelligence in its products.

Rizzo also mentioned that the market is at a pivotal point, with many consumers having upgraded their hardware during the COVID-19 pandemic. As the hardware cycle matures, he anticipates that the adoption of Apple intelligence will become increasingly important for driving sales and enhancing user experience. The integration of advanced AI features could lead to a resurgence in demand for Apple products.

Overall, Rizzo’s insights suggest a cautiously optimistic outlook for the tech sector, particularly for companies like Apple and those involved in semiconductor manufacturing. He believes that the interplay of tariffs, advancements in AI, and the adoption of new technologies will shape the future landscape of the industry, presenting both challenges and opportunities for investors.