logo
Dan Ives: China Tariff Truce Revitalizes Bull Case for Apple as Half of User Base Approaches Upgrade Cycle

Dan Ives: China Tariff Truce Revitalizes Bull Case for Apple as Half of User Base Approaches Upgrade Cycle

Yahoo22-05-2025

The company has a huge manufacturing base in the giant Asian nation.
It also has options to shift it elsewhere.
10 stocks we like better than Apple ›
Among the many tech companies that rely on Chinese manufacturing, none is better placed to benefit from the recent thaw in that country's tariff war with America than Apple (NASDAQ: AAPL). That, at least, is the view of closely followed tech industry analyst Dan Ives of Wedbush Securities.
In mid-May, the White House announced that it and China agreed to drastically reduce certain tariffs and pause others. Ives said in a subsequent interview with Bloomberg that this should lead to a "dream scenario" for the tech giant. Here's a look at why the analyst thinks Apple has such a monster opportunity, and whether the company can truly take advantage of it.
It's telling that Apple emphasizes that the iPhone is designed in California. This might be something of a head fake to obscure the fact that the smartphones aren't made there. Rather, in the most likely case, your latest iPhone was made in China; estimates place the ratio at eight or nine out of every 10 of these products being produced in the massive Asian country.
To put this in some perspective, Apple is hardly the only China-dependent large U.S. tech enterprise. Other notable techies getting many of their goods made there are sector mainstays Intel and Texas Instruments, to name two of many. Also China is a huge market for sales of their finished products.
Apple has a longer made-in-China history than many might realize. In those long-ago days before the iPhone came into being, Apple had been making its products in China in 2001. The lure of notably cheaper manufacturing was impossible to resist for the company, which was in the early stages of its vaunted Steve Jobs-led comeback around that time.
So any sanctions on Chinese manufacturing threaten to put a real hurt on its operations. After all, despite its efforts to crank services revenue higher, the great bulk of the company's top line still comes from device sales -- 72% of the total in the most recently reported quarter.
That's a high level of dependency, and I think investors worry about this. Even after Apple stock rallied when the pause was announced, its shares are still down more than 19% year to date in price -- comparing unfavorably with the 1% rise of the bellwether S&P 500 index.
They won't stay down at that level, Ives firmly believes. He's maintaining his outperform (i.e., buy) recommendation on Apple and his price target of $270 per share. That anticipates a rather chunky upside of more than 30%.
To him, the current stage of the tariff dispute provides the company with tantalizing options. One is to accelerate device-making in India, a more recent addition to its manufacturing base that came onstream in 2017.
This is a more expensive option by as much as 10%, according to recent reporting from Reuters, because of India's relatively high import duties on phone components. However it gives the company some leverage in its dealings with Beijing and can be a safety valve if the tariff war starts to heat up again.
If it doesn't, so much the better. Ives said that the company can easily maintain its "China-driven" manufacturing regime.
Either way, one of the stated goals of the Trump administration is to bring manufacturing back to the United States. In the analyst's view, that just isn't going to happen. The notably higher costs of making goods in this country would mean a price tag of $3,500 per iPhone.
So Apple's production strategy is not likely to stray from low-labor-cost countries. What's encouraging about this, according to Ives, is that it's stepping into a massive upgrade cycle. Over the next two to three years, he told Bloomberg, essentially half of Apple's installed base will buy the latest models. That should be quite the boon, as those models will remain inexpensive to make.
The market's reaction to the big tariff news was muted, perhaps suggesting that many investors expected a cooling of the dispute. These folks also might not be buying Ives's assertion that the upgrade cycle will involve 50% of Apple users. Many skip several generations of iPhones before moving up to the latest models, myself included.
Still, I'd share the analyst's bullish view on the stock anyway, and I'm planning on holding on to my shares. For me, the great opportunity just now is not with phones, or even those slick recent iPad models or ultra-high-fidelity Beats headphones. Rather, it's the services offerings.
In the six months ending on March 29, Apple's revenue for such offerings climbed by 13% over the same period the previous year. Meanwhile, products revenue rose only 2%. I think this dynamic will continue, as the company can go in various directions with services to either widen existing revenue streams, such as from financing activities, or create new ones.
All that considered, I'd be in the Apple bullpen with Ives. I'm not totally sold on all of his analysis of the company's latest opportunities, but regardless I'd fully agree the stock is a buy.
Before you buy stock in Apple, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Apple wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $642,582!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,879!*
Now, it's worth noting Stock Advisor's total average return is 975% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join .
See the 10 stocks »
*Stock Advisor returns as of May 19, 2025
Eric Volkman has positions in Apple. The Motley Fool has positions in and recommends Apple, Intel, and Texas Instruments. The Motley Fool recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.
Dan Ives: China Tariff Truce Revitalizes Bull Case for Apple as Half of User Base Approaches Upgrade Cycle was originally published by The Motley Fool

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Gyre Therapeutics Announces First Dosing in Phase 1 Trial of F230 for Pulmonary Arterial Hypertension in China
Gyre Therapeutics Announces First Dosing in Phase 1 Trial of F230 for Pulmonary Arterial Hypertension in China

Yahoo

time23 minutes ago

  • Yahoo

Gyre Therapeutics Announces First Dosing in Phase 1 Trial of F230 for Pulmonary Arterial Hypertension in China

SAN DIEGO, June 10, 2025 (GLOBE NEWSWIRE) -- Gyre Therapeutics ('Gyre') (Nasdaq: GYRE), an innovative, commercial-stage biopharmaceutical company dedicated to advancing fibrosis-first therapies across organ systems affected by chronic disease, today announced that the first volunteer has been successfully dosed in a Phase 1 clinical trial evaluating F230, a novel endothelin A ('ETA') receptor antagonist, for the treatment of pulmonary arterial hypertension ('PAH').This milestone marks Gyre's entry into the PAH field, a rare, progressive, and high-mortality cardiovascular condition with limited treatment options. PAH is recognized in China's National Rare Disease Catalog, underscoring its significance in public health. According to Frost & Sullivan, China's PAH market was valued at $370 million in 2023 and is projected to grow to $480 million by 2031.F230, originally discovered by Eisai Co., Ltd. and exclusively licensed by GNI Group Ltd. to Gyre, is a fully synthetic small molecule designed to selectively block the ETA receptor. By targeting this pathway, F230 is designed to reduce pulmonary vascular remodeling and lower pulmonary pressure, key contributors to PAH Phase 1 trial is designed to evaluate safety, tolerability, and pharmacokinetics in healthy volunteers. The trial represents the latest expansion of Gyre's fibrosis-first strategy beyond the liver, leveraging a robust clinical development platform and commercial infrastructure in China.F230 joins Gyre's pipeline alongside lead candidate Hydronidone (F351), which met the primary endpoint in a pivotal Phase 3 trial for CHB-fibrosis. A New Drug Application ('NDA') submission to China's National Medical Products Administration ('NMPA') is planned for the third quarter of 2025, and a pre-IND meeting with the U.S. Food and Drug Administration is being planned for an expected Phase 2 trial in metabolic dysfunction-associated steatohepatitis ('MASH') Gyre TherapeuticsGyre Therapeutics is a biopharmaceutical company headquartered in San Diego, CA, primarily focused on the development and commercialization of Hydronidone for liver fibrosis, including MASH, in the U.S. Gyre's strategy builds on its experience in mechanistic studies using MASH rodent models and clinical studies in CHB-induced liver fibrosis. In the People's Republic of China, Gyre is advancing a broad pipeline through its indirect controlling interest in Gyre Pharmaceuticals, including therapeutic expansions of ETUARY, and development programs for F573, F528, and StatementsThis press release contains 'forward-looking statements' within the meaning of the 'safe harbor' provisions of the Private Securities Litigation Reform Act of 1995, which statements are subject to substantial risks and uncertainties and are based on estimates and assumptions. All statements, other than statements of historical facts included in this press release, are forward-looking statements, including statements concerning the expectations regarding Gyre's research and development efforts and timing of expected clinical trials, including an NDA submission to the NMPA for F351, the expected clinical benefits of F230 and expectations regarding interactions with regulators. In some cases, you can identify forward-looking statements by terms such as 'may,' 'might,' 'will,' 'objective,' 'intend,' 'should,' 'could,' 'can,' 'would,' 'expect,' 'believe,' 'design,' 'estimate,' 'predict,' 'potential,' 'plan' or the negative of these terms, and similar expressions intended to identify forward-looking statements. These statements reflect our plans, estimates, and expectations, as of the date of this press release. These statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the forward-looking statements expressed or implied in this press release. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation: Gyre's ability to execute on its clinical development strategies; positive results from a clinical trial may not necessarily be predictive of the results of future or ongoing clinical trials; the timing or likelihood of regulatory filings and approvals; competition from competing products; the impact of general economic, health, industrial or political conditions in the United States or internationally; the sufficiency of Gyre's capital resources and its ability to raise additional capital. Additional risks and factors are identified under 'Risk Factors' in Gyre's Annual Report on Form 10-K for the year ended December 31, 2024 filed on March 17, 2025 and in other filings Gyre may make with the SEC. Gyre expressly disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by Contact:David ZhangGyre in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

BlackRock, Goldman Scale Up Tax Trades in $3 Trillion SMA Boom
BlackRock, Goldman Scale Up Tax Trades in $3 Trillion SMA Boom

Yahoo

time26 minutes ago

  • Yahoo

BlackRock, Goldman Scale Up Tax Trades in $3 Trillion SMA Boom

(Bloomberg) -- This year's stock market turbulence has punished ordinary investors. But for the wealthy, it's opened up fresh opportunities to convert equity swings into tax breaks — fueling a growing Wall Street business that turns volatility into a financial advantage. Trump Said He Fired the National Portrait Gallery Director. She's Still There. NYC Mayoral Candidates All Agree on Building More Housing. But Where? Senator Calls for Closing Troubled ICE Detention Facility in New Mexico California Pitches Emergency Loans for LA, Local Transit Systems BlackRock Inc., Goldman Sachs Group Inc. and Morgan Stanley are among firms scaling up a strategy known as tax-loss harvesting, typically offered through customized portfolios called separately managed accounts. When markets drop, managers sell stocks trading below their purchase price to realize losses. Those losses offset gains elsewhere in a portfolio, reducing clients' tax liabilities while maintaining overall portfolio exposure. The approach allows investors to shrink their current-year IRS bills while deferring capital gains into the future. In April's selloff, for example, a manager could dump Home Depot Inc. and rotate into Lowe's Cos Inc., maintaining sector exposure while staying inside tax rules. Once a boutique service reserved only for the ultra-rich, investment firms are repackaging market turbulence as a fiscal opportunity, with automated trading programs scanning portfolios daily as equity conditions shift. With fee pressure eroding revenue in traditional asset management, Wall Street is leaning more heavily on tax-optimization trades to differentiate offerings, retain clients and defend margins in a competitive marketplace. 'There is just inherently going to be more volatility in the system,' said Scott Smith, senior director at industry consultant Cerulli Associates. 'With trade policies, tariffs, taxes, everything is on the table. There is no assumption of what the future looks.' In one particularly active stretch during April's selloff, BlackRock's Aperio, a platform for personalized portfolios, executed more than $18 billion in trades. That generated $700 million in realized losses that can be used to offset taxable gains elsewhere in client portfolios, or so-called tax-loss harvesting. That equated to roughly $5 to $7 in losses realized for every $100 traded that month. 'We monitor daily. We look at losses and high-cash positions. We balance harvesting with managing tracking error,' said Ran Leshem, who oversees BlackRock's separately managed account business, now managing $220 billion. 'Our goal is to be the market leader in SMAs.' Still, even as this year's selling frenzy created opportunities, the equity rebound that followed highlights a trade-off: while the approach can lower future tax bills, it also locks in losses that may prove costly if markets quickly recover, making the ultimate payoff difficult to measure in real time. Regardless, the opportunities are only growing. Direct indexing, where investors hold individual stocks directly rather than through pooled funds, has become the backbone of this tax-optimization machine. With the SMA market expected to grow from $3 trillion to $5 trillion by 2027, firms are layering on increasingly complex techniques to compete, pitched as added-value services. Tax-loss harvesting is only one lever. Advisors also optimize dividend timing, gain deferrals, charitable gifting and jurisdictional overlays in an attempt to juice after-tax portfolio performance. 'Risk management and tax management go hand in hand,' said Monali Vora, global head of wealth investment solutions at Goldman Sachs Asset Management. 'You can't do one without the other.' Aperio's long-short tax-aware strategies, launched in 2023, amplify gross exposure — boosting the number of positions that can generate harvestable losses, while keeping market exposure roughly the same. About 7% of April's realized losses came from these strategies. While still a small share of overall assets, it's part of the firm's expanding business. Managing tracking error, or how closely a portfolio tracks its benchmark, remains a challenge. The IRS wash-sale rule bars investors from buying back the same, or substantially identical, securities over a specified timeframe. Firms navigate these constraints by swapping into correlated securities. Selling Moderna Inc. and buying Pfizer Inc. is straightforward; replacing a giant like Apple Inc. requires more complex substitutes. 'Clients are seeking alpha, downside protection and more tax-loss harvesting potential for both ETF and stock positions,' Leshem said. 'But with that comes the tug of war between harvesting and maintaining tracking error.' At Dimensional Fund Advisors LP, the approach is different. Instead of mirroring an index, the Texas-based firm uses broad diversification across thousands of stocks to reduce wash-sale risk, reallocating proceeds toward securities with higher expected returns based on their quant model. 'We can keep the profile of the account but take advantage of tax opportunity,' said Savina Rizova, co-chief investment officer and global head of research. Dimensional, which lowered its account minimum to $500,000 in 2021, harvested $20 million in net losses across about 1,400 accounts in April — averaging $16,700 in losses per $1 million invested. Parametric, Morgan Stanley's direct indexing arm, strikes a more cautious tone. 'Tax-loss harvesting is one layer of customization, but there are many others,' said co-president and CIO Tom Lee. 'For most institutions, tax management isn't their focus.' At the height of April's volatility, Parametric harvested $620 million in losses, generating around $230 million in potential tax benefits. That same month, Parametric also introduced an offering with a $25,000 minimum investment, part of a broader push to open direct-indexing features to smaller accounts and widen the client base for tax-managed SMAs. Quant hedge funds such as AQR Capital Management are also in tax-optimization arena, applying long-short structures aimed at maximizing harvestable losses while managing exposure drift. As competition heats up, Goldman Sachs Asset Management is pushing into new customization features to expand its tax-optimized platform, such as introducing capabilities to migrate equity ETFs into SMA portfolios. The firm has also ramped up its engineering staff to scale automation and global execution as tax-optimized services become increasingly industrialized. While tax-loss harvesting can reduce tax bills, research shows the biggest benefits tend to accrue to wealthier investors with large taxable portfolios and steady capital gains to offset. As such, for investors able to access these platforms, the appeal is simple. 'There is an awareness among investors that it's not what you make, it's what you keep,' said Parametric's Lee. 'Taxes represent a headwind for investors to the extent they have to realize gains in taxable accounts. You can take advantage of volatility when it comes.' --With assistance from Justina Lee and Lu Wang. New Grads Join Worst Entry-Level Job Market in Years The SEC Pinned Its Hack on a Few Hapless Day Traders. The Full Story Is Far More Troubling What America's Pizza Economy Is Telling Us About the Real One Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again American Mid: Hampton Inn's Good-Enough Formula for World Domination ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Is ChatGPT Down for You, Too? Widespread Outage Continues to Grow
Is ChatGPT Down for You, Too? Widespread Outage Continues to Grow

CNET

time27 minutes ago

  • CNET

Is ChatGPT Down for You, Too? Widespread Outage Continues to Grow

Have you noticed that ChatGPT is a little less chatty this morning? OpenAI is experiencing a widespread outage Tuesday morning that's affecting its ChatGPT AI chatbot service, as well as its Sora tool for AI-generated videos. The number of reported outages has continued to increase throughout the morning. An OpenAI representative responded via email, directing us to its post on X and its status page. Both stated that OpenAI is experiencing "elevated errors and latency" and that it has identified the root cause and is working to mitigate the underlying issue. The technical issues are also affecting OpenAI's APIs, which allow developers to tap into the company's AI models. The troubles been ongoing for seven hours, OpenAI noted, meaning they likely started around midnight PT. The Downdetector service also shows outage reports starting around that time and then spiking several hours later. (Downdetector is owned by Ziff Davis, which is also the parent company of CNET.) Launched in 2022, ChatGPT has become the most popular AI application ever released, with 400 million weekly users. A barrage of generative AI competitors have followed, including Meta AI, Google's Gemini and Microsoft's Copilot, but ChatGPT remains the leader largely because it's easy to use. At its Worldwide Developers Conference 2025, Apple even touted an expansion of its ChatGPT integration. The AI chatbot uses learning algorithms and large language models to process massive amounts of data from books and the internet, which it uses to deliver human-like responses to prompts from users. (Ziff Davis in April filed a lawsuit against OpenAI, alleging it infringed Ziff Davis copyrights in training and operating its AI systems.) This is a developing story. What can you do while OpenAI is down? Although OpenAI's ChatGPT may be among the most popular options, there are plenty of alternatives while it's down -- and many of them are free to use. Chat Claude is our current favorite chatbot we've tested, and Claude even knew all the details about ChatGPT's outage, according to my colleague Jon Reed, CNET senior editor who covers AI. Images If you rely on ChatGPT's Dall-E 3 as your image generator, we'd recommend trying for really creative work and Canva for free, beginner-friendly work. Video If you're looking for an alternative to Sora tool for AI-generated videos, we just checked out Microsoft's Bing Video Creator, which is super easy to use and live on mobile now.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store