Introduction welcome back to morning brief brought to you by Invesco Apple hitting another all-time high bringing its market cap above $3.6 trillion well ahead of the next closest company which is Microsoft which sits at just over 3.3 trillion now the tech giant also seeing its India sales jump 33% in the 12 months through March that's according to the latest results that we have out from Bloomberg as apple looks to to diversify Beyond China so what does this all signal ahead for the company's next iPhone release cycle we want to bring in Gil laua he's da Davidson's managing director Gil it's great to have you so it seems like we had this unrelenting move to the upside here in Apple shares and the narrative surrounding Apple certainly shifting here lots of excitement surrounding that new AI enabled iPhone that we're expecting to be coming I guess do you think that a lot of this excitement is it warranted it is uh we we haven't had a major iPhone upgrade cyle since iPhone 12 and now that there is a sense that there's enough new function ality and uses for the phone that we will have an upgrade cycle which could last for a year or two uh that that warrants this excitement around the stock um let's not forget iPhone is half of Apple's revenue and it really pulls with it a lot of other Revenue including Services Revenue which has been the the uh ongoing best grower within the business lines and so for Apple what does this signal about some of their other product lines what India what could continue to or what could do well as the company looks to further penetrate the India market so India has a a long-term promise for Apple it's it's the country that's creating the most middle class and upper middle class uh population anywhere around the world by far it is in that sense the kind of driver that China was for the last 20 or 30 years and so that's why it's a critically important market now to Apple's benefit it doesn't have domestic competitors there unlike China where now apple is going head-to-head with the domestic competitors that are making better and better phones in India that's not the case they really have as dominant a position in in the high end of the market as they do in other countries outside of China and that means that India will continue to be a long-term growth driver across businesses for iPhone growth Apple K what do you think this upside really looks like here for the for the sock so in terms of the the growth rates uh the the consensus expectations at least going into the worldwide developer conference was that iPhone would grow 5% which was actually not bad considering it hasn't grown in a couple of years we actually think the iPhone sales uh this upcoming year could grow 10% because the functionality is going to be compelling as as uh folks use some of this new functionality during the holidays on their iPhone 15 Pro and some new users use it on the iPhone 16 versions it's going to be compelling to other people and and other around them and other people have iPhone 12s 13s phones that are due for an upgrade and once they see that this functionality is only available in newer phones it will compel them to go out and buy a new iPhone you also cover a host of other Microsoft tech companies and one of them being Microsoft are there other strides that you're seeing other consumer tech companies make within the same region where where apple is starting to see its efforts really ramp up so on Microsoft side the impact is so broad right now in the implementation of more Ai and generative AI including in the PC category so the AI PC will be another place where we start using AI capabilities more generative AI capabilities more aips have been for sale they'll probably be part of a cycle as well it may not be as pronounced as the iPhone cycle but considering PC sales have have been in a in a hangover the last couple years they've started showing signs of growth and that's a category adjacent to the apple right the Mac is going to have ai capabilities as well and that could drive more sales there so let's not forget that that's another category that Apple could benefit from but Microsoft will as well but for Microsoft the benefits of AI are really across the business starting with Azure into the office products Etc Gil Broadening out most of the mag 7 companies are within your coverage when investors hear about a broadening out or people perhaps reducing or trimming some of their positions taking profits where necessary in some of these names and then either sitting on cash waiting to deploy or reallocating to other sectors what does that hold for these companies that had been part of the famed mag 7 and and should they be weary when they hear about that broadening uh we'll see the the biggest cap um technology companies have outperformed because their fundamentals have outperformed they've grown earnings when others have not that's why there's that's most of the reason their stocks have done better it's also the fact that they present less risk because their businesses are so entrenched and diversified that would have to change we would have to see the the 492 494 whatever other companies you want to consider actually have earnings growth they haven't had earnings growth for a while if they actually have accelerating earnings growth outside of these Mega caps we may see a convergence of uh of uh stock performance that just hasn't been the case so far it it is the these biggest companies that have had the highest growth rates in revenue and profitability they've contributed most of the growth to the S&P 500 earnings and until that changes there's we may not see a convergence and Gil real quick before we let you go if you had to pick one of the big Tech names that's best positioned here ahead of this earning season who do you have Amazon Microsoft and Apple are now getting a lot of credit for what we just talked about they're seen as AI winners and their stocks are reflecting that by trading at the high end of historical multiple ranges we actually think Amazon at the end of the day may have more AI business than any of these other companies AWS is the biggest hyperscaler and it's done a lot to catch up to Azure in terms of AI capabilities and yet Amazon is getting very little credit in terms of multiple it's trading at at average multiple compared to T historical rates and so we think that's where when they get more credit that stock will outperform all right goria da Davidson's managing director thanks as always for hopping on with us thank you