Motley Fool Money - Does Apple Have a New Hit On Its Hands?

Episode Date: March 4, 2026

Apple has introduced a number of new products this week, including a new phone and displays. But the Macbook Neo is a low-cost Mac that could make the company’s PCs more popular for kids and families. Whether it moves the needle for the stock will take time to tell. Travis Hoium, Lou Whiteman, and Rachel Warren discuss: - Apple’s new products - Does AI need new hardware - Are airline stocks in trouble? Companies discussed: Apple (AAPL), Delta (DAL), American Airlines (AAL), United (UAL). Host: Travis Hoium Guests: Lou Whiteman, Rachel Warren Engineer: Dan Boyd Disclosure: 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. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit ⁠⁠⁠⁠⁠⁠⁠⁠megaphone.fm/adchoices⁠⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Apple has new hardware and may have a hit on its hands. Monty Full Money starts now. Welcome to Motley Full Money with the Hidden Gems team. I'm Travis Hoyum, joined today by Rachel Warren and Lou Whiteman. And guys, Apple is in the news again. These announcements aren't quite as exciting as they were 15 years ago. But I did think that this new product announcements over the last couple of days were kind of meaningful because this is some new products that could be compelling. and we're in this new world of AI.

So, Rachel, let's start with you. We have new MacBook pros. We have new Mac, new monitors. We have a new MacBook Neo, including Ares. I don't know if we need both of those things. What did you take away from all these new products announcement? Do any of them move the needle for Apple? I think it does.

So the MacBook Neo, I do think, is actually a bit of a shift in Apple strategy. The idea here is to directly challenge Windows PCs and Chrome. books in that more budget conscious consumer as well as education sector. So it's $599, $599 for the MacBook Neo, $49 for education clients. It's Apple's most affordable laptop ever. It's about $400 less than the prior generation of MacBook errors. It's the first Mac to run an iPhone class chip, which is the A18 Pro. It delivers up to 16 hours of battery life. It's capable of on-device AI tasks. So that's pretty cool. Maybe the MacBook Air, I think, still has a very clear place in the lineup. It's obviously a higher price than the Neo.

And Apple... Nearly double the price, even just for the lower end model. It is. Well, and that's what's interesting. So Apple has strategically differentiated the price is here to try to avoid total cannibalization. You also see that they actually increase the starting price of the new MacBook Air by $100 to $1,099. And the MacBook Air recently was updated with the M5 chips,

so you've got much higher CPU and GPU. scores. I think this is an interesting move. I mean, the error is really the mainstream choice if you're a user that needs significant RAM, you know, longer battery life. But then the Neo, Apple's trying to target segments that they maybe had previously seated to competitors like Alphabet and Microsoft. So I think you look, I mean, these entry to your devices, they're designed to capture millions of iPhone users who maybe have never owned a Mac and maybe they're more budget conscious. And so I do think that there's something to be said for this. It's so unbranded for them to announce a crumbook killer that is 3x more expensive than a

lower-in-crumbo. Do you think that's really the market that they're going after? The Chromebook is such an underpowered product. I mean, my kids use it at school. When I saw the Neo, what was exciting for me was this is the first Apple product that I could see, we could actually buy this for the kids and it wouldn't completely break the bank. And that's the point. give, you know, giving them a seven-year-old PC like we have that ultimately breaks. Yeah. So it,

it sort of fits a nice category for consumers. Maybe you're right that it doesn't fit it for schools. Well, yeah, I mean, I don't think it does, period. I mean, look, Chromebooks right now have 80% market share in the K-to-8 market. Really, I challenge you to go try and get most school systems to change anything about the way they do business, especially something that's going to be more expensive. So, if that was the goal, good luck with that. If it's not the goal, Travis, to your point, is there the risk of cannibalization? If you were trying to reach a new market with this, I think it makes sense. If you're trying to reach an existing market, that, yes, maybe you will spur more sales. Maybe it isn't a one-for-one. Maybe Travis will buy his kid a new device

where otherwise your family wouldn't have bought an air. So maybe it can expand sales that side. But if you were just adding a lower cost item to your lineup for your users, then it's not going to be a one-for-one sales game. I mean, look, I think they have intentionally kind of stunted this machine. The 8 gigs of RAM, I think, matter in terms of, you know, you're not going to, you're not really going to get the power users that way, even if they are just kind of using web apps. I don't think this is a problem, but I do think, Travis, to your point, these used to be much more exciting. The stock is up less than 1% today. No longer is there visionary on stage in a black turtleneck announcing some brand new category. We used to talk about Apple cars. We

used to talk about Apple TVs. Now we're talking about Chromebook rivals. And Apple's a great business with install base, but I don't think anything says more about innovation at Apple 2026 than that. Yeah, we have not heard at least yet about the Apple TV. I'm also looking for a Mac Studio, because that's what I would consider buying. Lou, I want to push you on one thing. And I'm just looking at the financial numbers. I want to take this a little bit in a financial direction, not just vibes on their products, but a vast majority of Apple's sales from a segment standpoint goes to iPhones.

So that's really what you need to protect. And then services are actually number two at $113 billion over the past year. So that's, if you're trying to build a mode around the business, that's it. the Mac, only $33 billion worth of revenue. So if something like the Neo just expands that product, gets you using two Apple products instead of one, you know, maybe you add that computer instead of buying, you know, a Chromebook or a different tablet for kids, for example, isn't that enough of a win, even if you're not necessarily setting the world on fire?

What I don't know here, maybe, and I think it can be a win. It's not sitting the world on fire. But how much of those incremental sales are people that just otherwise wouldn't have bought something? Or are they, you know, at the expense of the iPad or something like that? And so, yes, there's probably add-on. But if you are basically selling a kind of add-on device to an existing user, that's, again, nothing wrong with it. And I don't mean to imply that they shouldn't do this because I don't think it's a strong enough. to really cannibalize their sales. And you're right, the iPhone is so important. But again,

this, I don't, I think the market has this right, putting the stock up, you know, less than 1%, because I think it's just, if any other company did this, if Samsung did this, we wouldn't be talking about it. It's Apple, so we're talking about it. But I don't, I do think we're sort of, again, everyone's living in the past wanting those one more thing days to come back. And there is no sign that they're coming back anytime soon. Maybe later in the year we'll see something more incredible, but this is very much just mature company, does mature company thing. That's true. The other thing, we don't have an answer to yet, but something to keep an eye on as an investor is they did not significantly raise prices on most of their products.

There's a little tiny price increases, but with RAM costs through the roof, is Apple insulated because they have long-term contracts? Are they going to eat a little bit of that? so margins are going to come down in 2026. We will see how that plays out. When we come back, we are going to talk about the future of AI and the potential that we don't need a new hardware paradigm. You're listening to Motley Fool Money. Some of the best lessons don't come from a classroom.

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The other topic that I think Apple's new products brings up is what does the future of hardware look like in this AI paradigm? What typically happens, Rachel, is you get some new technology that comes along. It leads to new hardware. Everybody adopts that. And then 10 years or so later, that gets disrupted again. We've seen them with PCs. You've seen that with mobile phones.

Is this time going to be different where, you know what, AI is proliferating, but we're just going to be using kind of the same devices we were using before? I think the truth is going to be somewhere in the middle. I mean, we're kind of seeing a clash between a couple different trains of thought here. And one is, you know, the idea of hardware revolution, the idea that AI is going to be so transformative that, you know, the screen in your pocket are smartphones are actually holding it back. And so someone that falls into this line of thought believes that we're heading towards this idea where AI is going to live in smart glasses and wearables.

It's going to replace a lot of the devices that we know, say, a company like Apple for. If this wins, obviously, Apple's dominance would become more of a mainframe problem. They would own the old world, not the new one. The other kind of train of thought and the one that I tend to more fall into is the theory of hardware refinement. That's what you're seeing Apple move towards with, say, the MacBook New, which we were just talking about. Apple's betting that AI is not a new device. It's a super feature that's going to be layered on top of what you already own. I mean, you think about it this way.

The internet didn't replace the PC, but it made the PC essential. And I think that Apple is betting that AI follows this path. And I think that they're, what we're seeing with these, yes, not the most exciting announcements we've seen in terms of products, but certainly key innovations that could be growth tailwinds. I think what they're saying is, you know, the hardware doesn't need to change shape, but just needs to be affordable enough for everyone to access the AI layers that they are building in.

And one final thing I'll note, Apple specifically, they design the chips. They can process AI locally on your device rather than in the cloud. So for users, that means speed, that means privacy. That can be a massive selling point as and if AI becomes more personal. So that's kind of what I'm thinking about when I look at this space right now. Lou, does that fly in the face with some of the moves that particularly open AI has made, they bought Johnny Ives company for $6 billion or so. They seem to be very interested in making a piece of hardware,

but is this really just a software layer? Yeah, I mean, I was going to say, Sam and Johnny disagree. I'm skeptical until I see it because I don't know what that's going to be, but they are very much, I mean, whether or not Sam Altman has incentives to try to say that they have something amazing coming, you know, that's neither here nor there.

We'll see what they deliver. AI is off device right now. So it is a layer. There's talk of moving more of it on device. I think all of the data center spending might, you know, speak to the realistic. Both of these things really can't be true. So I do think a lot of the processing will make. So it's how are we going to interact with it?

And that is, I think, a problem that's been solved. I am, maybe I'm just showing my age. I am very skeptical that what we want is, you know, for primary devices, smaller screens. means, less visual. Apple started this in this direction, didn't they? Even the first iPhone, it was Samsung and companies like that that were making huge screens, and Apple was kind of like, ah, we don't want to do that. And suddenly, they had to follow suit a few years later.

Well, but I mean, do you really think that that boils down to a screen that's just a little part of, you know, your glasses or something? I'm skeptical about that. I really am. There's some things that audio is good for. There's some things that visual are good for. I do think here that AI has potential to help us evolve here, better voice recognition and better just making that actually work. Maybe we don't need keyboard. So there is incremental change.

My guess here is the next five years or so in consumer tech are very similar to the last five years. Refinement on existing designs, new complementary devices, kind of a supplement, but no huge radical disruption. If anything, I mean, I think there is a threat here. But really what it is is that if AI is everything that they say, does AI become almost the entire device? Does AI become almost everything we interact with? And if so, does operating system matter as much? And that, I think, that is a real long-term threat. I don't think right now, but I think that is the more just interesting twist here than some new form factor that's going to spring up in the next year or two that puts the iPhone at risk? I think the bigger question is, is that does that Walgarden fall

if we use the operating system less? Yeah, the other question is, are we moving to a world of what you would call thin clients? So where, like you said, the compute is in the cloud, so you don't necessarily need a super powerful computer or mobile device in your hand. You just need something with a good internet connection. So maybe the differentiation point becomes completely different. Yeah, maybe that does kind of eat away at the operating system. But then again, you have millions of people choosing that operating system and they've been doing that for a very long time. When we come back, we are going to talk about the future of airline stocks. Now that oil prices are up, you're listening to Motley full money. These days, I'm all about quality over quantity,

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Quince.com slash motley. to Motley Full Money with the Hidden Gems team. All right, Lou, your favorite airlines. Many of these stocks have been on fire over the past few years, at least relative to, you know, kind of historical performance. They've optimized pricing. Valuations are relatively low. Single digits, price earnings multiples in some cases. But now we have skyrocketing oil prices, oils up about 15% in the past week as we're recording. This conflict in the Middle East could turn us towards a recession. We talked about that yesterday. And the potential impact the higher oil and gasoline prices can have on the U.S. economy, which is already

kind of in a tenuous spot, especially for, you know, the, let's say, bottom 70 or 80% of consumers. What is the bare and bulk case if you're looking at airline stocks and seeing these and sort of salivating at these low multiples? So, first of all, it's worth known that the actual business effect is very small. United is the largest airline to Middle East, but still, it's less than 2% of their seat miles the way we do it for Delta and American, well less than 1%. So there isn't really a business issue here. Oil is what we're watching. Now, it's good to know oil is a level playing field. Nobody is really overly hedged more than anyone else. So if your oil cost goes up, if your fuel

prices go up, you feel the pain everyone else does. That should lead to rational pricing. I figure it takes two or three months to pass along higher fares, so the biggest near-term risk with oil is the quarter. Over time, they can adjust to this, but near-term, it could ruin the quarter. For a long-term investor, you shouldn't care about that. What I think you should care about, Travis, and the point you made is, is the bigger risk is what this does to the macro. It's not really the cost that these airlines are paying in fuel. It has to do with what the consumer is paying and fuel on other higher costs, and whether or not that affects demand. And long term, the good news here is that all of this restructuring, it used to be that every

time there's an oil shock, we'd lose two or three players. All of these companies, even the weakest ones, are more resilient now. We saw this in COVID. I mean, they got some help here, but even they can survive the oil shock. They can't necessarily thrive. I think if you want to buy airlines for the long term, I'm not sure that's a good idea in general, but I don't think I would shy away from the best names in the business because of what's going on. I think I would, as they say in the airlines, buckle up and brace for turbulence. Rachel, when you look at this industry, how do you think about the costs and then the valuations? Because this is a very interesting, different industry today than it was, you know, even 10 years ago,

but very, very different than, you know, when I was a kid in the 80s. Yeah, it's evolved a lot. I mean, there's obviously cost pressures that can come from these changes we've been seeing. I mean, you have airlines like Delta that said in one of their recent annual filings that every one cent increase in fuel per gallon adds about $40 million in annual expenses. We know that the sort of de facto closure of the Strait of Formuz is halted about 20% of global oil, liquefied natural gas supplies. So there's sort of this battleground between the record-breaking travel demand, the sudden energy shock. On the both side, it's fair to say that airlines have spent the last several years really transforming into leaner machines with massive pricing power. We've seen record travel, especially in those higher margin premium seats.

And so you do have companies that are coming into this crisis with cleaner balance sheets, tighter control over how many planes are in the air. The industry leaders like Delta are in a much stronger position to absorb some of these costs than they were a decade ago. But the fuel squeeze is real. I mean, obviously, if skyrocketing energy costs trigger global recession, there's a real risk for the industry where their operating costs go up, just as consumers are also cutting back on.

more discretionary spending or business spending. So I think when you're looking at the space, the operators that have remained the most efficient, I think of companies like Delta, like United or better positioned than, say, a business like American Airlines. But certainly this is going to be a challenge in the near term for all of these players, no matter how financially agile. Yeah, one of the things I'll be watching here is what does that demand look like? Because that's something we do here on a quarter to quarter basis. You can also look at this with pricing.

We've recently planned a trip with the family, and those prices got a little bit more attractive. So maybe that means that that demand is coming down just a little bit for people who are traveling. We'll see how this plays out throughout the year. As always, people on the program may have interests 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 the Motley Fool's editorial standards, and is not approved by advertisers.

Advertisements are sponsored content and provided for interest. informational purposes only. To see our full advertising disclosure, please check out our show notes. For Rachel Warren, Lou Whiteman, and Dan Boyd behind the glass, I'm Travis Hoyum. Thanks for listening to Motley Full Money. We'll see you here tomorrow.