Motley Fool Money - Apple’s New iPhones and Oracle’s AI Bounce

Episode Date: September 10, 2025

We discuss the new iPhone’s impact on Apple’s business, whether the economy is slowing, and what Oracle’s huge move today means for investors.Travis Hoium, Lou Whiteman, and Rachel Warren discuss: Apple’s newest products Jobs data and the latest on inflation Oracle’s blowout numbers Companies discussed: AAPL (AAPL), Oracle (ORCL). Host: Travis HoiumGuests: Lou Whiteman, Rachel WarrenEngineer: Natasha Hall Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. Learn more about your ad choices. Visit megaphone.fm/adchoices

The iPhone 17 is coming, and Oracle is the new hot name in artificial intelligence. Motley Fool Money starts down. Welcome to Motley Fool Money. I'm Travis Hoym, joined today by Lou Whiteman and Rachel Warren. And we're going to get to the big news of the day. That is Apple announcing new iPhone 17, new watches, new AirPods that can do translation in line. That's a pretty cool new feature if you're traveling. Tim Cook used a lot of superlatives that you would have thought this was a, you know,

2009, 2010, iPhone launch. But are these products ultimately a needle mover for Apple Lou? Because Apple's kind of in an interesting spot where they have reached maturity. The revenue is actually down from its peak in, I believe it was 2021. Some of these products are not really spurring that upgrade cycle that they would like. So does this do anything to help them? So the definition of a needle mover, the stock is down today. So I would say, no, it's not, right?

So at least not for one day. And look, this is a mature business, Travis. It struck me when you said the iPhone's, 17 because gosh, we've done 17s. It's almost getting like Super Bowls. It's like, are we still going to do this at some point? And I think they're still counting those at least almost in order. Yeah, order-ish, right.

But look, it's a mature business. The design and engineering is impressive. I'm curious, guys, I don't know if I'd want that slim iPhone. I don't know if you would, but that just looks like something that would snap in your pocket. But if it didn't have the bump, the massive camera bump, I would be totally interested in. But I think what you said is interesting is that presentation was an engineer. presentation. Yeah. That was not really a product presentation and that is just a huge change from 15 years ago when these were kind of must-see TV. And we've moved past the days where people

are going to see just shiny new bells and whistles and say, yeah, I need to spend another $800 or a lot more every year. The design days are over until they get some next big thing. It's all about software. And again, we knew this going in, but it's all about AI is the next big thing in terms of drive a refresh cycle until Apple can deliver on that and really gets people saying, now I need a new one, the way they did back in the old days when they went from the size of, you know, a full brick to just a half brick and stuff like that when there was real innovation happening. I don't think it does move to needle. It's just, it's almost like when Chevrolet announces the new version of their, you know, Silverado every year. Does that matter? Does that drive?

I mean, kind of, but no. Yeah, unless there's a big change in the design. And there's, we're not really at the point where any of these phones are all that earth shattering from a design point. We've gone to 3G, 4G, 5G, I don't know, we're not adding any Gs. We're not adding any Gs anymore either. So Rachel, you know, what was your kind of takeaway from this overall presentation? Seems like a lot of cool products, but I frankly, as I look at, do I want to upgrade any of my

devices? I just can't get there. Yeah. Well, and I think that's also a question that a lot of consumers are at. asking themselves right now in a tight economic environment. You know, I do agree with Lou in the sense. I don't necessarily think this presentation was a needle mover for the business. But it's certainly an event that both investors and consumers look at, you know,

annually to see what's happening with Apple. I mean, this is a company that's largest revenue sources still the iPhone. That accounts for 50% or more of Apple's total revenue in a given year. This is, you know, primarily a hardware business. And they announced four new iPhone models. And that includes their newest model, the iPhone 17 Air. It's thinner, it's lighter than Apple's other devices. It's based on a new titanium body.

Their entry-level phone, which is, you know, the iPhone 17, as you mentioned, that got an improved display with a higher refresh rate and camera. There were some slight price bumps to some of their products like the iPhone Pro. And they released three new Apple watch models. You know, they added a new health feature to the devices that uses machine learning to determine if the user is at risk for high blood pressure. One thing that was pretty interesting was the new chip in the iPhone Air and Pro models. It's called the A19 Pro. It does have some AI-related improvements, and it's powering those iPhone 17 Pro models. It has a neural accelerator in each of the GPU 6 cores, and that really performs much more intensive mathematical computations. Apple's chief marketer said at the event that the chip will enable its devices to run on local large language models.

So, you know, there were some exciting bits and pieces. I don't think anything that is a major needle mover for the business right now. I think one of the biggest things, if you're an investor, looking at Apple like I am right now, is this is still a company that's falling very far behind in the AI race. And those integrations into their phones are far behind what we're seeing, for example, from, you know, Alphabet with their Google Pixel products. And I think that's something that some investors are worried about right now. Yeah, the pixel's great.

And the new Pixel is really built for AI. given up, they've sort of sacrificed some of their other features and compute for AI compute. Lou, I wanted to get your thoughts on one final thing with Apple. The iPhone business is actually doing okay. In the trailing 12 months, it was actually the best revenue that they've had for the iPhone in the company's history. But if you look at everything else, the Mac, the iPad, and then a segment that they call wearables, home and accessories.

So that's going to include the home pods, but it's also going to include AirPods. That was really the big driver of that business through kind of 2021 or so. That segment, the wearables home and accessories, is down 13% from its peak in 2022. All three of those segments, including the Mac and the iPad, are all in decline. Does this do anything to juice those business? I know we didn't get Macs or iPads, but I'm just, it sort of seems like Apple's core business is kind of stagnant at this point. And the upside for investors is services and services to me is just kind of how much can you squeeze out of consumers who are using your devices. Yeah.

You know, it's interesting with the AirPods because I don't even know if I mean this as a compliment or as a red flag. But I think it's just it's what it is. We talk a lot about the cult of Apple. We talk a lot about the cost of switching over if you have to, the Walt Garden. The AirPods are an area where if you have a Bluetooth device, you can just, you do not have to stay within the Wald Garden, right? And the net net is fewer people use the Apple product. I think that speaks to the fact that to some extent, Apple's consumer advantages is because you have to, not because just every product is superior or consumers just want to buy.

Like, there's this, the cult of Apple is that knowledgeable, sophisticated consumers want to buy Apple because it's so much better. And the AirPods story, you know, look, they still make a good product. and it might speak to the have to on the phone side that, you know, so that's great for investors. But I do think it tells a story of, you know, if you give consumers a choice, maybe Apple engineering isn't just end of story better than anything else,

the only game in town, period. Yeah, the AirPods are really compelling, but that's a couple hundred dollar device. And I'm probably more likely to upgrade that device more than I am my iPhone. So the net net for Apple. Easier to lose, too. Far easier to lose. I have lost a handful of those.

And over the last five years, I've gone through a handful of AirPod devices too and happy to because I use them all the time. But yeah, it'll be interesting to see if this moves anything for Apple in the future. I think they're talking a lot about artificial intelligence, but doesn't clear they have a great story there from a product refresh cycle. When we come back, we're going to talk about the latest economic data. Get a feel of where the jobs market is going.

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The big news earlier this week is that the BLS Bureau of Labor St. Statistics came out with their full year job numbers ending March 2025. So these are a little bit delayed, but they're hopefully at least a little bit more accurate than the monthly survey numbers that we get. That usually happens on the first Friday of every month. But the big number was that we lost 911,000 jobs that we previously thought we had. This is all a little bit confusing. But Lou, what should we actually take away from this big revision number?

It doesn't mean that the economy was any different than it actually was, but the measurement is now kind of coming in, and this is hopefully more accurate than we had previously. Right, exactly. And it is important. You said it, but this is through March 2025, so this is not real time. But it does sort of take, I think real time matters here because it takes some of the wind out of people like me, who were saying of the latest jobs reports, this could be transitory. This could be like a one-time thing. It makes it seem like that we have a longer trend towards a cooling economy. And if so, I think it actually makes the Fed's job easier, right? Because if it's transitory, arguably you act or you don't act.

If there's a long-term trend towards slowing, then there's more reason to act. Travis, do you imagine? We also got an inflation number, the PPI number, which was much cooler than expected. And I do think, like for real time for investors, we could, I think, make the case that should be less worried about the S word, stagflation, which I think is most of the most would agree. That's the biggest. And what exactly is stagflation? Stagflation is an environment where inflation's going up, but the economy is not going up. The economy is under pressure. So there's no really good tool. Things are getting more expensive and you have less, the consumer has less

purchasing power and the economy has less. Because you don't want to lower rates, which is going to make inflation worse. Right. Right. You don't. The Fed only has one tool and it's a very, very poor tool in this environment because the two sides of the dual mandate would suggest different directions for rates. So what do you do? Look, the interesting thing about this is a year ago, we were all sort of expecting, we were talking hard landing or soft landing, right? And the economy was unexpectedly strong. And so in a way, I think what we're seeing here is that, okay, maybe what we were sensing was more accurate than we thought. You know, like things weren't as rosy. You know, we can get into it. I think there's either, like for an investor from here, there's, you could take glass half full,

you can take glass half empty, but at least now we know where things have been. What did you take away from all this data, Rachel? Well, it is interesting. I mean, most of the time span for this report of case, of course, came before that the current administration. So we know that the jobs picture was deteriorating before there was the levying of these tariffs against U.S. trading partners. But we've also been seeing recent months data that has pointed to a.

softening labor market. You know, the summer months of June, July and August, for example, saw average payroll growth of just 29,000 per month. That's below the break-even level for keeping the unemployment rate steady. And a lot of the largest markdowns came in areas like leisure and hospitality, retail trades. You know, this could lead to a firmer push for rate cuts. You know, we're hearing there could be multiple in coming months.

And that remains a complicated issue, as Lou alluded to, with sort of the dual sides of the mandate. You know, for example, the antidote to inflation can exacerbate employment issues. So it will be interesting to see what happens in the coming months. We are certainly coming from a place from the employment perspective that seems to be weaker than we imagine. That may not bode well in the near term if tariffs and other policy measures cause additional uncertainty for companies. But it still seems to be too early to tell. I mean, that PPI report did provide good news on inflation fundamentals. The services sector that drives about 80% of GDP. The services sector saw deflation falling about 0.2% and even goods prices rose just 0.1%. So we're still very much, I think, in a wait and see place. And I think

that's important to note. The one thing that I want to add to is the PPI inflation number was really hot in July and it came back in August. So, you know, Lou, I'll give you the final word here. this data should always be taken with a little bit of a grain of salt. And we want to look at kind of the long-term trends. I think that's what you're pointing to with. Maybe the Fed's decision is easier if the labor market was weaker than we thought in March. And it's gotten pretty, it's been pretty weak over the past three or four months. Maybe we do need a little bit of a rate type.

Yeah. So as an investor, I'm always trying to, who cares about the past, what are we looking into the future? The glass half full, the Goldilocks here is that maybe we are just in a run-of-mill slowdown. These things aren't fun, but they happen. We know how to deal with them that it's not exotic shocks like tariffs, that we are just in this part of the business cycle and we'll get through it. And hey, I'd rather everything go up, but we can handle that. It's not bad. The more worrying spin is that say we were already in a downward cycle push and then we do get exotic events.

And tariffs really are slow to show themselves and we are going to feel the strain of tariffs in the months that come. there's a world there, then we might be caught really off guard with stuff that we don't know how to handle. I don't think any of us know that. I think we just have to watch and see how it plays out. I think the holiday season will be very interesting when it comes to inflation to those of us who are buying gifts, maybe for kids. Is there a little sticker shock or not? We will have to see over the next few months. When we come back, we are going to talk about Oracle, the hot stock of the day, Larry Ellison, I think maybe the richest person. in the world after this recent move in Oracle shares. You're listening to Motley Full Money.

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And you will. Now available in Canada, too. Don't keep settling for clothes that don't last. Go to QINCE.com slash Motley for free shipping and 365-day returns. Quince.com slash Motley. Welcome back to Motley Full Money. Oracle reported earnings after the market closed on Tuesday. Stock is up 40% today.

They reported, actually their numbers weren't all that great. They missed on both, I think, the top and the bottom line. But the big thing was they have. remaining performance obligations. You may be seeing the term RPO floating around is now $455 billion. I want to read this quote from the conference call. We now expect Oracle Cloud infrastructure

to grow 77% to $18 billion this fiscal year, then 32%, then $32 billion, $73 billion, 114 billion, and $144 billion over the following four years. Rachel, these numbers are enormous. The stock move is crazy. Oracle could be the next trillion-dollar company if they aren't already there by the time this actually hits people's feeds. What in the world should we be taking from this earnings report?

And in particular, the market's reaction. Yeah, I mean, the stock is on pace for its best day since the early 90s. Another kind of key number from this report was their incredible growth in their multi-cloud database revenue. That was up 1,500 percent year-over-year. And that's largely attributable to partnerships with Amazon, you know, Alphabet's Google and Microsoft. I think that when you look at this, I mean, this is a business with fundamentally solid financials. They have become a major destination for AI companies that are building large-scale data centers to train and run their AI models. Their OCI provides really that high-performance computing and critical GPUs and networking needed for demanding AI workloads.

And they have tried to really position themselves as the faster and more. more cost-efficient option for AI model training compared to other hypers. And I think that's where a lot of the excitement comes from. I mean, something that Larry Ellison also noted was that they are about to introduce their new cloud infrastructure service called the Oracle AI database. They say that's going to enable their customers to use the large language model of their choice on top of the Oracle database to access and analyze existing database data. So I think we're kind of in the early stages of what we might be seeing,

with Oracle's AI journey. But I think the other thing to note here is something we're seeing in the market right now is when a company reports good results, incredible results around AI. The stock takes this incredible hike upwards. And I think there's so much excitement around AI businesses right now. And I think sometimes the market is not necessarily pricing the reality of those businesses into the picture. I mean, I think Oracle could be an interesting way to play the AI space, but I think it could

be easy to overlook some of the other lack rest of results. And I don't necessarily know that this is a fairly valued business at this point. Yeah, Lou, $455 billion in remaining performance obligations. They generated $59 billion in revenue over the past year. So apples to apples, you know, remaining performance does not have a one year time. So, you know, this is over time. But yeah, trust that number more than tripled in three months. And they said there's, well, two or three more multi-billion-dollar deals that they're going to sign. And it sounds like most of that obligation was from just a hand, just a few companies. Yeah.

Fools, here's the thing. It's great. And this is a stock now that has doubled since June, all right, which is, hey, cheers. Remaining performance obligations are not the same as revenue. There is no guarantee that a dollar in future performance will actually become a dollar of revenue. None of us know. We can debate all day here how much of it will. I can give you a scenario where, of course, it will, because Open AI needs the compute and Open AI has an unlimited stream of ways they can raise money. I can also say, look, Open AI doesn't really have access, that they don't have the Google or meta advertising business. So they don't necessarily, it could get hard for them to get the money. All of this can just evaporate overnight if the market changes, or it could even be bigger than we imagine if things stay the same. I would be very nervous buying into this rally

just because it is the difference between real core business and what they think is to come. However, we've seen enough from AI to know there is a there there, and I'm not totally dismissive of it all playing out well, too. So I just, it's too hard for me. Yeah, I also think it's in the too hard pile. But it will be very interesting to see. My question is, are we, in 1997 from the internet's perspective or is it 1999 and I don't have a great answer for that yet. But something we will definitely be talking about on this show in the future. As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear.

All personal finance content follows Montley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Lou Whiteman, Rachel Warren, and Natasha Hall behind the glass, I'm Travis Hoyle. Thanks for listening to Mama Coolman.