Neuberger Berman's managing director, Steve Eisman, shorted collateralised debt obligations to profit from the fall of the US real estate market in 2008. His bets against the housing market made him a legend on Wall Street.
Actor Steve Carrell depicted Eisman's journey during the global financial crisis in the movie "The Big Short." Movie producers had changed his name to Mark Baum for the award-winning film.
In a CNBC interview last week, Eisman discussed the AI landscape and highlighted Apple as the unsung player in the rapidly-evolving space. The company's stock has rallied since the announcement of Apple Intelligence products last week at the Worldwide Developer Conference. The presentation revolved around user privacy and its partnership with OpenAI.
Apple senior vice president of software engineering, Craig Federighi, had mentioned during the presentation that "Apple Intelligence" puts AI models "right at the core of your iPhone, iPad and Mac" and "protects your privacy at every step."
Despite posting a 4% year-over-year revenue decline in Q1 to $90.8 billion due to a slump in product sales, the stock price jumped from a low of $165 in April to record highs above $210 last week.
Eisman had previously described Apple as a "hidden" AI play and now believes it is crucial to the AI story. He said, "Definitely hold on to your Apple position. It's too central a figure in the whole story."
According to him, people would naturally want AI apps on their phones. "If AI is going to broaden out beyond just the cloud, people are going to use it on their phone," Eisman said.
In an interview last month, he explained, "I have an iPhone, and when those apps come out, I'll need a new phone. I'll need a new iPad, a new laptop," adding that the easiest way to play AI is "Nvidia, AMD, a few other chip players, and anybody in the cloud with a massive database. Beyond that, there's Apple...After that, it's unclear because so much of what's going to happen is unknown."
When the apps show up, Eisman said the biggest beneficiary would be Apple because they will "have a [product] refresh of everything they sell," the scale of the refresh is yet to be determined.
He reiterated last week that "two extremely dominant stories in the markets today" are AI and infrastructure, and these two segments will continue to drive gains for the following years.
Eisman also remains bullish on the economy for 2024 and isn't worried about rates or credit quality as banks remain healthy. "What I would say is that in bad times, people focus on credit quality and balance sheets, and in good times, they focus on stories. And we're in storytime," he noted.
Eisman is working on other potential "downstream" winners but didn't disclose names as he hasn't bought them yet. Regarding the upcoming elections, he doesn't see them having significant implications for the markets, highlighting that the US economy is more dynamic than it has ever been in its history.
Wedbush analyst Daniel Ives had maintained an "Outperform" rating on Apple shares with a stock target price of $275 apiece. He views Apple's AI announcements as a gateway for an AI-based iPhone growth cycle.
Ives noted that AI in the Apple ecosystem will lead to scope for "ample monetisation" and add between $30 and $40 per share to the company's growth story.
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