Money Rehab with Nicole Lapin - How Apple's AI Update Will Affect the Stock Market

Episode Date: June 24, 2024

As you may have seen, Apple just announced new AI features that set the internet on fire. But these updates have geopolitical and macroeconomic implications that could shake up the stock market— and not necessarily in a good way. Nicole explains what's at stake, and who's mad.

One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that

I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime. Feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details.

I love hosting on Airbnb. It's a great way to bring in some extra cash, but I totally get it that it might sound overwhelming to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your

reservations, messaging your guests, giving support at the property, or even create your listing for you. I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host. Hey, money rehabbers, I'm going to be putting together a few totally anonymous surveys over the next couple months, and I would love to hear from you. The first one is up now at MoneyNewsNetwork.com slash survey. I would so appreciate it from the bottom of my heart if you

could take a few minutes and take this survey. I promise it's short and let me know your thoughts. Thank you. Thank you. Thank you. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. You probably saw the headlines around Apple's announcement of their latest update. Normally, Apple updates involve new emojis and cool upgraded features, but this update is a little bit different, with economic and geopolitical and privacy implications that reach far beyond the emoji animals you can select on your keyboard. Apple is making a big push into AI with what they're calling Apple Intelligence. This isn't just a souped-up Siri. These are features that can automatically organize your emails, transcribe and summarize audio,

and actually generate custom emojis. So they still got their emojis updated there. Anyway, Apple also signed a deal to give users access to chat GBT in Siri. Someone was very mad about this, but more on that in a moment. These AI updates are rolling out in U.S. English this fall with more languages and features coming next year. Sounds super exciting, right? But there is a catch or or several, when it comes to China. China is a huge market for Apple, but it's also a tough one. Beijing has strict regulations on AI, which means Apple can't just roll out the same features in China as it does everywhere else. In fact, Apple was pretty quiet about its plans for China during their big AI announcement. Why? Because they have to navigate a maze of Chinese regulations.

And to be honest, it's unclear how Tim Cook is ever going to do that. But let's unpack the economic implications here. First, Apple's market share in China has been slipping. In the first quarter of 2024, Apple held 15% of the market, which sounds pretty good, but it's actually down from 20% the previous year. This has implications for the broader stock market because Apple's market cap is a little bit over $3 trillion, but it's been going back and forth with Nvidia for the second largest company by market cap, with Microsoft in first place, but by a small margin.

The U.S. equities market has a total valuation of about $40 trillion. That means Apple makes up about 7.5% of the total US stock market, and that gives this one stock a whole lot of influence over our investing world. Meanwhile, Chinese phone manufacturer Huawei, despite being hit hard by US sanctions, has bounced back and is now the top smartphone maker in China. Huawei and other local Chinese brands are also heavily promoting their own AI features, which puts even more pressure on Apple. From a regulatory standpoint, China's rules around AI are stringent. For instance, any large language models, which are used to create AI tech like chat GBT, needs approval from authorities. Additionally,

generative AI providers must remove any, quote, illegal content. This poses a direct challenge for Apple because, as I mentioned, ChatGPT plays a big role in Apple's new AI features, and ChatGPT is banned in China. To work around this, Apple might need to find a Chinese AI partner to provide similar functionality. Economically, what does this mean for Apple and the broader markets? Well, for Apple, the need to create localized AI solutions could slow down their rollout in China and increase costs. And if Apple does nothing, its market share in China could continue to slip, which would hurt the company and therefore the U.S. economy. For China, there's a

bit of a balancing act here. On one hand, they want to control and regulate AI technologies with their borders. On the other hand, there is a clear demand for advanced tech from its consumers. If Apple can successfully navigate these regulations, it could mean more high-tech jobs and investment in the Chinese economy. And what about the U.S.? Well, Apple's AI advancements are part of a broader tech race with China. How Apple fares in China could impact its competitiveness globally. If Apple manages to crack the Chinese market with compliant yet innovative AI features, it could set a precedent for other tech companies facing similar regulatory challenges. This could enhance the U.S.'s position in the global tech landscape, driving innovation and economic growth. Okay, it's time to talk about who's mad here,

and it's Elon. Man, Elon cannot stay out of money rehab lately. Elon threatened to ban employees across all of his companies from using Apple products. He claims that he is considering a ban because he's worried about security and privacy issues with ChatGPT, calling it, quote, creepy software. People were quick to point out, though, that Elon is developing a ChatGPT competitor called Grok, and he might just be a little salty about Apple partnering with GBT instead of his AI software. But are his privacy concerns valid? Some people say no, because Apple users can opt in or opt out of ChatGBT, and Apple says that no information is stored and minimal data is shared. So the

people that aren't all that concerned about the Apple-ChatGBT collab say it's basically the same thing as using ChatGPT on your computer. But I do find that hard to believe. And I know the whole our phones are listening to us is sort of a conspiracy theory, but who among us hasn't said to a friend that they were thinking about buying something like new headphones and then an ad for headphones pops up the very next day? I don't not believe it. And so if there are privacy blind spots in ChatGBT, having an app on our phones would give ChatGBT more data on us, like more location data for people like me who carry their phone with them more often than their computer. And of course, search call and text data. And listen, I am not totally in Elon's camp either.

I am not saying this is creepy spyware, but I am saying that I think we need to remember that typically, if a product is free, we are the product. And when it comes to the free version of ChatGBT, we need to ask ourselves, are we becoming the product? And if so, how? For today's tip, you can take straight to the bank. It's expected that the iPhone 16 will be announced soon and released sometime this fall. The majority of Americans buy a new phone every two years or so, so if you're committed to those blue texts, then you'll probably have dropped between $500 and $1,500 on iPhones every two years. If instead of doing that, you just invested in Apple stock

every two years since the first iPhone dropped, you'd have almost 100 grand now. If you can buy an iPhone, you can buy Apple stock. And if you think Apple has a bright future in the US, China and beyond, see what index funds contain Apple stock and whether or not they're a good fit for you. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a time checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit.

Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A.

Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details. I love hosting on Airbnb. It's a great way to bring in some extra cash,

but I totally get it that it might sound overwhelming to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your reservations, messaging your guests, giving support at the property, or even create your listing for you.

I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble. So I don't end up making time to make my house look guest friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin.

Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you.

Thank you for listening and for investing in yourself, which is the most important investment you can make. Thank you.