Has Apple Turned Into A Boring Company?

Technically, Tesla (TSLA) isn’t a tech company. Which is why it doesn’t show up in today’s Trackstar list of the five tech stocks investors search for most. 

For more from The Juice on Tesla, see Tesla Crashes … Sort Of.

Even if we include TSLA, Apple (AAPL) remains the most searched ticker of them all. While, technically, Apple is tech, it’s also a consumer products company. 

From an innovation and investing perspective, there can be an uneasy relationship between the two classifications. It’s something Tesla might someday struggle with, if it isn’t starting to already.  

Let’s consider some Apple history to front this discussion. 

It’s pretty crazy to think that Steve Jobs has been gone for more than 12 years. He died on October 5, 2011. 

When Jobs died and Tim Cook became CEO, lots of people freaked out. Objectively, because the era of showmanship at Apple was officially over. Product events simply would not be the same. 

But also because, more subjectively, people felt as if Apple could no longer innovate, not only in the absence of Steve Jobs, but with Cook at the helm. 

For some investors, it was also pretty crazy to think Apple would start paying a dividend again. However, in what might have been Cook saying “this is my company now,” Apple did in 2012, roughly six months after Jobs’ passing. 

Some investors don’t like it when tech companies pay dividends. They see it as a sign that growth might be slowing. That idle cash needs to be spent on innovation (R&D), future growth and maintaining a war chest.

That’s a lot of symbolism. These are the realities:

• Apple spent more than $29.9 billion on R&D over the 12 months, ending September 30, 2023. That’s a 14% year-over-year increase and an all-time high. 
• Apple has $162.1 billion in cash on hand. Let that sink in. 
• The company has increased its dividend — albeit modestly — for 12 straight years. 

A growing dividend absolutely can coexist with spending and a massive war chest. Without doubt, The Juice thinks Apple will end up a dividend aristocrat with that coveted 25-year dividend increase streak. But this doesn’t mean Apple is Procter & Gamble (PG). Far from it. 

However, this doesn’t change two other glaring realities. Revenue growth at Apple is slowing. This is something our sister newsletter, The Spill, recently brought up when it slapped AAPL with a 6 out of 10 rating and pondered some of the same things we’re throwing around today: 

Financial pros who searched out the stock spent a lot of time looking at the company’s revenue growth now and over the last decade.

With supply chain snarls and slowing growth in China, Apple’s revenues fell by 2.4% for the trailing 12-month period.

Although it’s still one of the most valuable companies in the world, many wonder if it’s hit a transition point from high-growth tech to something more akin to a consumer staple …

After acknowledging that Apple’s previous annual revenue declines in 2016 and 2019 were followed by single- and double-digit growth, The Spill also gave a nod to Apple’s cash pile and profitability before deciding to pass. Pass because there are better investments out there amid uncertainty of exactly how Apple will generate future growth. 

Which brings us back to those bygone concerns over the Jobs-Cook transition.

Maybe it took the naysayers more than a decade to be right? 

We did a quick search of tech message boards, Reddit and Quora asking questions related to Apple’s innovation, or lack thereof. And most of the Apple defenders cite AirPods and Face ID. While you can call these developments innovative, the reality is they’re not Steve Jobs just fucking crushed BlackBerry innovative.

And herein lies the problem. 

Where’s the next iPod, iPhone, iPad? 

Where’s Apple TV, the Apple Car and anything else that would make a much larger splash than Apple Watch, which is not a Tim Cook innovation? 

The Bottom Line: Investors should be concerned. When you think about the next wave of tech (that’s already here), you don’t necessarily think Apple. You think Nvidia (NVDA), even Meta (META) and definitely dividend-paying Microsoft (MSFT). 

A Microsoft that has, by the way, increased its dividend for 22 straight years. Over the last five years, MSFT has returned 255% versus AAPL’s 359% of upside (not counting the dividend). Over the last year, MSFT is up 49%. AAPL, 32%. 

Concerning, but also confusing when you start to look at numbers. 

So, what’s the solution? Go back to keeping things simple. You don’t have to subscribe to a one size fits all approach. 

There’s the Apple way. The Microsoft way. The Meta way. The Nvidia way. The S&P 500 way. The Nasdaq 100 way. The Steve Jobs way. The Tim Cook way. There’s something good — and not so good — to be said about every which way. 

Don’t outsmart yourself. Put your eggs in all of these baskets. Diversify across tech, particularly tech companies that double as consumer products behemoths (think Apple, Tesla, Amazon) and tech companies leading the AI revolution. If you’re a long-term investor, The Juice thinks this remains the best way to play the broad space.

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