Latest Positions: Apple, Google, Amazon, Meta, Netflix

Here is Part 3 of the list of my latest personal portfolio positions and most of the hedge fund positions with updated commentary and ratings for each position.

The ratings for each stock go from 1 to 10, 1 being “Get out of this position now!” and 10 being “Sell the farm, I’ve found a perfect investment.” The positions that are bolded are those that I consider to be “core” holdings and am unlikely to ever sell out of them entirely.

• • AAPL Apple (8+) — Here are some of the many things that investors are worried about with Apple right now: iPhone sales in China slow down. A lack of innovation. A lack of a coherent AI strategy. A lack of adoption of the new Visor Pro headset. Did I mention iPhone sales slowing down in China? It’s really the China and the AI issues that have caused Apple’s stock to so badly outperform so far this year. In order of importance then – Apple is likely biding its time and letting its biggest competitors like Google and Microsoft scramble to spend billions on AI here at the top of the first inning of The AI Revolution. AAPL‘s got more data about everybody on an iPhone than anybody but Google with their Android users. Apple is certainly working on its AI offerings, but much like how they let Google and Amazon roll out “Hey Google” and “Alexa” before Apple got serious about their Siri voice interactivity, I think Apple is letting Microsoft and Amazon and Google fight over the current batch of Nvidia’s best compute chips and will then roll out some great AI features individualized for each of its billions of people in the Apple ecosystem. China iPhone sales will become ever less important to Apple in coming decades as China moves to exorcise US-based technologies like the ones that Apple makes slowly but surely over the next decade (I actually don’t think China will be as hard on Tesla as they will be on most US-based tech firms but that’s another topic entirely). And the Visor Pro headset, while cumbersome with its stupid dongle battery design hanging off your head, is actually going to be Apple’s most important hardware product for the next decade. On my desk, I still have my original iPhone 1 from 2008 and it doesn’t even seem like the same product that the iPhone 7 was or that my current iPhone 14 is. So too will the Visor Pro 5 and the Visor Pro 7 be almost unrecognizable when compared to this Visor Pro 1. Picture a pair of auto-tinting glasses that you wear on your face and talk to and which has a personalized AI engine inside of it that knows everything that Apple knows about you, your interests, your spending habits, how much you spend on what, etc. It’s going to be Revolutionary. In the hedge fund we came into this year with a very small AAPL position but as of this week, it’s gotten to be a mid-sized position for us as we have been putting in bids to add more AAPL every day that it’s been down this week (which has been every day this week). I plan to buy a little more every $5 lower it goes in coming weeks or months, if it does drop more from here.
  • GOOG/GOOGL Alphabet (8) — Google got a lot of mud on its face when they rolled out their AI Gemini Image Generator to the public without realizing that Gemini couldn’t make white people even when historically accurate even when directly told to. Furthermore, Google’s core search business is certainly threatened by ChatGPT and Grok and other Large Language Model (LLM) systems and still others that will be released in coming months and years. But then again, Google has been investing in AI and has been a leader in AI for a decade or more since even before they acquired what was by far the leading AI company in 2014, Deep Mind. And Google runs much of its cutting edge AI on its internally-designed TPU chips instead of having to rely exclusively on Nvidia’s best chips like other AI LLM companies do. As Bryce texted me this morning when we were working on The AI Revolution: “We have to stick with GOOG because it’s the only vertically integrated AI company. They own everything from silicon design, compute, algos, data, LLM, distribution network, and ad platform that will go on top of it all. Maybe Meta has most of that too now that I’m thinking about it. But MSFT’s AI stack looks like Swiss cheese compared to GOOG.” We have a good-sized position in GOOG right now and, like with Apple, I plan to buy a little more every $5 lower it goes in coming weeks or months, if it does drop more from here.
  • AMZN Amazon (7-) — Although you can’t tell it from the stock price action, which has been very strong this year, Amazon’s got some issues with trying to stay up with Google, Apple, Microsoft and Meta (and Tesla) in The AI Revolution itself. Sure, Amazon knows your buying habits online, but it doesn’t know what you buy at the bodega or the airport like Apple does hundreds of millions of its users double click the power button on the side of the iPhone to use Apple Pay when checking out or even when entering the NYC subway. Amazon Web Services might actually find itself with another viable competitor or two as Tesla and Meta are likely going to offer some Cloud AI services. That said, Amazon’s clearly been one of the most Revolutionary companies on the planet for a long-time and the new CEO seems like a good operator. I’m not bailing on Amazon obviously, but we have trimmed it down recently in the hedge fund and aren’t looking to buy more for a while.
  • META Meta (7+) — Meta quietly set itself up to be, quite shockingly frankly, the leading open source AI company out there. I mean, the misnomered OpenAI company is being sued by its cofounder and primary initial funder, Elon Musk, for closing its system (and for becoming a for profit). And of course, Meta’s own VR/AR Oculus headset sets it up to be the fourth de facto standard Operating System/Platform for the entire world in coming years (Apple’s iOS and Google’s Android, and Microsoft’s Windows being the others. Meanwhile, CEO Mark Zuckerberg, has cut this company down to a lean place and mentioned on last quarter’s earnings report that doing so had actually accelerated innovation because it keeps the company focused. The stock has obviously been on fire for a long time now and we have a pretty good sized position in the hedge fund and we’re mostly sitting tight with it for now.
  • NFLX Netflix (7-) —Netflix is the Tesla of streaming. That is, just like Tesla was able to spend years creating EVs that eventually inspired its competition to emulate them only for those competitors to find that they can’t actually make profits trying to compete with Tesla, so too have Paramount, Disney, Warners Brother Discovery, etc found out how hard it is to make profits trying to compete against Netflix. The single biggest threat to Netflix now is the same single biggest threat to all those Hollywood-quality content creators: Generative AI video technologies. While not yet released to the public, OpenAI, Google and others are working hard on making Generative AI video a reality. In another two or three years from now, I’ll be able to upload that novelette I wrote in the slums of Borough Park Brooklyn in 1997, add a few images of what I want the primary characters to look like, and then tell one of those Generative AI video platforms to create a 90 minute movie. I’ll probably have to do some human reinforcement to get it all put together like I would want it to and then I could release it in 8k format on YouTube and watch it on my big screen 8K TVs. I’m not going to sell Netflix at this stage because of that competitive threat, but it’s certainly something to keep an eye on.

That’s it for now. Part IV will be out on Friday.