$AAPL · The Motley Fool · 2026-11-03

Apple, new CEO, same old earnings.

I will admit I have not exactly been super excited about Apple's earnings recently for various reasons. It's kind of, you know, the same old same old for quite a while. But we do have CEO John Turnis.

This is his first earnings uh under his leadership. And I was actually more intrigued to see what they had to say this time around, especially with new products like the foldable phone.

it I I totally understand why you have not been excited about Apple's earnings for a while. I mean, I I would argue they're historically the most boring out of the Mag 7, at least over the past like 3 or four years.

Um, and that's kind of by design. It's a a great mature business. They keep growing revenue at a low double-digit rate. They keep buying back stock. They keep doing good capital allocation.

Um, Apple is the most powerful buyer in the supply chain. A company can double or triple just because Apple becomes their customer. Um, so Apple has a lot of pull and even it can't get enough memory that it needs at reasonable price.

And John Turnis, the new CEO, called this unprecedented. But when a company like Apple is saying something like this, you know, AI data centers are are outbidding Apple for parts, it really just tells you how intense the AI buildout is and how supply constrained the memory market is.

Yeah. Lou, I have to imagine too that uh John Turnis wasn't too happy when Sam Alman said over the weekend, "Oh, we should stop being selfish and have all the memory, you know, to our personal devices and it should all just be going to the data centers, right?"

I may have to give up my 401k to them. I'm not going to give up my computer. Okay, Sam. Sorry, but uh yeah, I I think you it's hard to find something that's shocking here.

I mean, I I would say if anything, Matt's right with the memory, but still gross margin fell to 45%.

So, you know, this is such I've joked it's the new Birkshar Hathaway where they just can't impress. Probably the biggest number that made me say, "Huh," was one I read in relation to the earnings.

Apple has gained a trillion dollars in market share since late June. A trillion dollars.

I remember when that used to be a lot of money. It just kind of speaks to just all of the just the the scale we're talking about here. It's hard to move these big battleships and it's hard to really do anything that makes you go, "Wow." or as you say, huh,

feel like I'm being a cranky old man. I'm like, well, I remember when Apple crossed the $1 trillion mark and it was such this pivotal moment. I I do want to touch on an issue that I I'm struggling to just to re figure out if this is a real problem or if this is just kind of a media needs something to talk about problem.

And that's this folding phone uh is or we've seen recently in social media posts in uh financial media, regular media as well is like there's stories of these new folding phones that Apple bought out and they're already starting to break.

And I was curious if on the earnings call or in the press release, anything you guys have read that Apple actually called this out. Is it actually like a real problem that they need to face or is this maybe just something that's amplified because it's Apple, it's a good headline, and you know, the media wants to run with it.

>> It's a real problem, but it's not one that Apple didn't anticipate. Uh, and it's not an Apple specific problem. My next door neighbor has a a Galaxy flip phone, and it's broken twice in the past year. Uh, so it's not an Apple specific problem.

And I'm sure they one of Apple's things that they do is they they're late to the party like they are on flip phones and they learn from their competitors before they actually go to market with something.

So Apple's called out that a small number of its units are affected. They're replacing them through Apple Care. They uh John Turner specifically said that demand remains ahead of supply on the flip phones.

So it sounds like an issue that yes, they were late to the party in a good way because it let them prepare. They know that, you know, obviously when a phone flips open, it's more breakable than a phone that's essentially a brick.

So, it's it's an issue they prepared for for now. It's a pretty small problem.

I don't think they didn't really prepare enough though if it happened though, right? Look, I mean, this isn't for investors needle moving, but there's a few things here. For one, it's embarrassing because nude CEO John Turnis in their his first call, where did he come from?

He came from hardware. Okay, this is not how he wanted to start it, you know, I mean, it's not going to linger forever, but it's just a uh why this hap happened.

Also, I think it speaks to something that has been sort of gone anyway. It's been a long time since anybody really like the it's Apple, it just works. That halo, I think that's sort of gone.

But this is again, the bigger you get, the more you know, the more you're involved in different things, the harder it is to kind of control every element of your supply chain, every element of your design.

That's what's playing out here. But it's just a mature company problem.

>> It certainly seems like it can be fixable. Again, like maybe a few in a in the initial quarter doesn't look great, but if this is something they can kind of figure out over time, that would be a nice change.

Now, Lou, you mentioned something at the top and I feel like this is a good jumping off point where you're saying Apple's becoming a Berkshire Hathawayesque type investment. And the financials say that too.

They got tons of cash on the on the balance sheet. Uh they're paying down debt. They're buying back stock. They're paying a dividend and yet there's still excess free cash flow.

They're not like the hyperscalers. They're not plowing all this money into data centers and all this other stuff.

So, let's play a little like armchair CFO like with all this excess cash in just kind of floating around in the balance sheet. Blue, what do you think they should do next?

>> Yeah, I mean that that's why I love the Birkshshire comparison because almost what can they do to really move the needle, right? I don't know how you can I don't know what they could buy to really make a wow this is a change you know a new just perspective for the company they've done a great job with everything they're doing the share count is cut in half in the last decade

but if you want something how about perplexity buy perplexity and have like model agnostic Siri if Siri is coming you know with with all the AI goodness why tie that to Google or anyone else why not buy a company that's good at just kind of you know whatever ever model works, just making it work and integrate that in so they're not tied to anyone going forward.

>> Matt, anything on the something as bold as buying perplexity you think they should do with their cash or maybe just stick on doing the boring stuff?

>> The the buybacks are the boring but the obvious answer. Uh I think they should invest in their supply chain. Apple could do something similar with the memory chips it needs.

You know, either prepaying for memory agreements or invest directly investing in one of the memory makers to secure the memory that it needs. There's a lot that it could do and it has a lot of cash to throw around that gives it an advantage even over a lot of the AI players.

So, I I I'd like to see Apple kind of get a little more aggressive on controlling its supply chain.