What financial analysts thought about the Apple Silicon Mac announcements

Posted:
in General Discussion edited November 2020
The era of Apple Silicon Mac devices arrived on Tuesday with the company's "One more thing" event. Here's what financial analysts thought about the announcements.

Credit: Apple
Credit: Apple


Apple unveiled three new Mac devices equipped with proprietary M1 chipsets at its Tuesday keynote: a MacBook Air, a 13-inch MacBook Pro, and a Mac mini. Among other improvements, the addition of the M1 bolstered the performance, battery life, and cross-device integration of the macOS devices.

Here are some key financial analyst takeaways from the Apple Silicon event, and how the move to custom chips could benefit Apple's Mac product over the long term.

Samik Chatterjee

JP Morgan analyst Samik Chatterjee sees limited volume benefits from the introduction of M1-equipped Mac models, largely due to "limited comparisons being made by a typical consumer between Mac products versus non-Apple notebooks during a purchase, given widely different price points."

Heading into the Nov. 10 event, Chatterjee expected Apple to introduce a new and separate Mac model instead of outfitting existing ones with Apple Silicon. He also expected Apple to drop the price of Apple Silicon Macs, something that only actually happened for the Mac mini.

Because of that, the analyst expects the benefits of the Apple Silicon to "play out over a longer time horizon" as Apple leverages increased control over its technology roadmap and scaling of production. Both could drive savings on its bill of materials.

JP Morgan is maintaining its $150 AAPL price target.

Daniel Ives, Wedbush

In a note to investors, Wedbush's Daniel Ives says that Apple is "embarking down a new chapter by announcing its own new processor architecture that will focus on speed, power/efficiency, and more improvements/flexibility for its all-important developer community."

Ives sees the announcement as the first of many to come, and says it represents a major step -- fifteen years in the making -- that will allow Apple to control more of its hardware ecosystem.

Although the analyst still sees the iPhone 12 "supercycle" as the most important development for Apple, he notes that both iPad and Mac models are seeing continued demand due to the new work from home and remote education environment.

Ives maintains his 12-month AAPL price target of $150.

Katy Huberty, Morgan Stanley

The release of new Apple Silicon Mac models cements Apple's "strongest ever product cycle," a fact that Morgan Stanley analyst believes signals double-digit growth into 2021.

Katy Huberty believes that the next-generation Mac models, along with Apple's current portfolio of hardware and services, can drive an earnings-per-share growth rate of 25% heading into 2021.

She also notes that the three Mac models Apple chose to outfit with its new M1 chip actually represent 91% of all Mac shipments in the past 12 months.

The analyst maintains her $136 AAPL price target.

Krish Sankar, Cowen

Cowen analyst Krish Sankar sees a competitive Mac system product roadmap as an integral part of Apple growing its customer base, and also believes that the Apple Silicon could drive a "consistent user experience across all computing devices."

The Apple Silicon Mac chips will help Apple control its technology roadmap, and could allow it to optimize the cost structure of Macs going forward. For reference, Sankar says that the Mac products represent about 10% of total sales and 4% of earnings-per-share for Apple.

Sankar also notes that the M1 chip could drive an EPS accretion of about $0.13, representing an EPS increase of about 80% to 90% for the Mac because of in-house silicon sourcing.

The analyst maintains his 12-month AAPL price target.

Gene Munster, Loup Ventures

Gene Munster says that the announcements aren't the same type of "speed bump" that the Mac has received every few years. Instead, he contends that the Apple Silicon transition improves the value proposition of the Mac in speed, battery life, and cross-device integration.

That bodes well for the Mac, since PC owners account for about 92% of the total global computer market. Mac owners don't need convincing to "stay loyal," but Munster says that Apple needs to strengthen the case for a PC user to switch to Mac.

Munster also believes that the Mac has benefited significantly from new remote work trends, which has allowed the product lineup to surge after years of relative obscurity. More than that, the analyst says that it's impressive that the Mac continued to sell at record numbers after announcements that it would soon be undergoing a major architecture switch.

David McQueen, ABI Research

David McQueen, research director at market advisory firm ABI Research, says that the M1 chip in the new Mac models could be an important step toward both 5G integration and "always-on" connectivity in Apple's notebooks.

That's in addition to Apple's promises of performance and battery life enhancements, and the fact that using its own chips in Macs could benefit from the existing integration between software and hardware already seen in the iPhone.

McQueen added that the benefits to consumers could extend to a more seamless workflow between Apple's disparate products, and could be a boon to developers who will be able to create apps capable on running across Apple devices.

Comments

  • Reply 1 of 11
    Let Intel sink. Looking forward to leaving their failings and empty promises behind.
    williamlondon
  • Reply 2 of 11
    Most miss the real thing! 15-17 hours of battery life is a game changer and no other company can replicate this within the next 5 year. 
    cornchiprandominternetpersonwilliamlondonmwhite
  • Reply 3 of 11
    cornchipcornchip Posts: 1,866member
    Love how “meh” these all are. Thank goodness Apple doesn’t play to these clowns. 
    williamlondonmwhite
  • Reply 4 of 11
    Appleish said:
    Let Intel sink. Looking forward to leaving their failings and empty promises behind.
    Apple had 6% of the market in 2019. They were 8% in their best quarter in history ... one in which more Intel-based Chromebooks sold than Intel-based Macs.

    So as Apple will not have 50%, 25% or even 12% of the market - they have had as little as 3% and their peak position ever was 15%, a peak they only reached because the overall market contracted due to enterprises and many consumers refusing to buy Windows 8 devices ... as soon as Windows 10 released Apple went back to single digits in market share - and more importantly the Windows and ChromeOS devices that will continue to be 90+% of the market or more will continue to use primarily Intel CPUs, with AMD being second and ARM devices with Qualcomm, Samsung and MediaTek SOCs being a distant third as Dell, HP, Lenovo and the rest will not have the option of using Apple's SOCs for their Windows devices.

    And please, none of this "others have the market share but we make all the profits!" nonsense. That only applies to makers and sellers of the end user devices. Intel charges Asus - who has razer thin profit margins on their cheap Windows and ChromeOS laptops - the same for their Core i3, Core i5 and Core i7 CPUs as they do for Apple's $1000-$3000 Macs. As for the i9 and Xeon CPUs, Intel sells less than 1.5 million of those for Mac Pros and very top end iMacs and MacBook Pros a year. The vast majority of their i9 and Xeon chips wind up in server and data center devices. 

    So while you get to leave Intel's failings and empty promises behind, the rest of the industry can't because they have no other alternatives. And the rest of the industry is like 90%-95% of the PC and desktop market and 100% of everything else. So just like Microsoft was fine despite the success of the iPhone - they are a $1.5 trillion company - Intel will be pretty much the same company they were after Apple splits as they were before Apple joined up with them in 2005 in the first place. After all, Apple's market share has only gone from 3% then to 6% now (or rather in 2019, the last full year stats that we have available). 
    muthuk_vanalingambeowulfschmidt
  • Reply 5 of 11
    I'd like apple to come out with an affordable laptop, say an iBook, 8gb, M1 with 128gb or max 256 storage. maybe 6 core. Make the base model 699.

    Agree with the thoughts that only interested apple fans will buy the newly released kit. They need to give the cost conscious consumer a reason to be interested in switching. Funky value kit with great software. It does not need to cannibalise the rest of the range, needs to be a stand-out entry point.

    Think different 🙂
    muthuk_vanalingam
  • Reply 6 of 11
    dewmedewme Posts: 3,950member
    It was telling to see one of the late night comedy hosts talk about the "big Apple announcement" that pretty much boiled down to Apple announcing "a new chip" in the words of the show's host. I wouldn't take this a knock in any way, but rather as reminder that a lot of the things that WE get all geeked up about are oftentimes totally oblivious to a ton of people who are looking at the outward appearance of products with absolutely no concern about what's under the shiny cover that wraps the thing. 
    edited November 2020 beowulfschmidt
  • Reply 7 of 11
    cloudguy said:
    cornchip said:
    Love how “meh” these all are. Thank goodness Apple doesn’t play to these clowns. 
    OK ... who are the people who didn't own MacBook Air, entry level MacBook Pro and Mac Mini devices before that are going to run out and buy them now? Let's say that I own a Dell Inspiron 7000. I should run right out and get the new M1 MacBook Pro, right? Or maybe not. Because:

    Does this M1 MBP have a touchscreen like my Dell? No.
    Does it have a 2-in-1 design with USI stylus support like my Dell? No.
    Can the M1 MBP with its unified memory match the combined performance of an 11th Gen (10nm) Intel Core i7 with 16 GB of RAM and the Nvidia GeForce MX350 and its 4 GB of RAM? At best, a definite maybe. It is notable that not at any time did Apple claim that it did. Apple primarily compared the M1 Macs to the lower end devices with discrete graphics that it was replacing, as well as "top selling models" that cost half as much as the M1 MacBook Air.
    Can it play my Steam video games, or pretty much any of the software that I need and want? Of course not. 

    A bunch of people who already own Macs are going to buy new ones. A few people who love their iPhones and iPads will try out a MacBook Air or Mac Mini. But that will be it, and the analysts know it. You are expecting these droves of Windows users to completely change their computing needs and wants just to get their hands on a PC with an Apple-designed CPU. Which presumes that the 90-95% of the population that doesn't buy Macs and the 75-85% of the population that doesn't buy iPhones loves everything that Apple makes as much as you do. They don't. They are going to look these MacBooks that still cost a lot more than Windows PCs and now run an even smaller subset of the software that they want and need and continue to pass them up as before, Apple-designed CPU or not. 


    I think you are going to be in for a rude awakening. Anandtech review of the iPhone A14 chips is known to be competitive with anything that Intel or AMD has to offer in a desktop.  M1 chips is going to be fast.

    To your other point, most consumers do not need a faster home computer for email and web browsing.  So any low end, cheap x86 machine is fine, much the way Android phones are fine for the majority of users.  So x86 will not die, but Apple has no interest in the low end market and never has.

    Hardware is only as good as the software, but software typically lags behind hardware.  So the questions is like the Field of Dreams, if they build it--hardware that is 2-3x faster than the current x86, will they (developers) come.  

    More importantly if you need a high end computer, would you pay big money for a computer that is appreciably slower and drains the battery quicker.  Maybe you would, but I wouldn't.  Overtime time, there will be less people like you willing to make that choice.  Pretty much want happened with iPhone and iPad.

    bestkeptsecret
  • Reply 8 of 11
    avon b7avon b7 Posts: 5,959member
    I'm not fazed one way or another. I've avoided the transition process itself from 68k to PPC, PPC to Intel and still got bitten by software issues.

    I'm keeping an open mind though and will wait things out. It's way to early to draw conclusions one way or another. 


    muthuk_vanalingam
  • Reply 9 of 11
    radarthekatradarthekat Posts: 3,407moderator
    Apple Silicon will play a major role in Apple’s participation in the future of self-driving vehicles.  Just sayin.
    tmay
  • Reply 10 of 11
    hentaiboyhentaiboy Posts: 1,245member
    Now that Apple is using numbered CPUs in the Mac line, it’ll be interesting to see if they release yearly upgrades as per the rest of their portfolio...
  • Reply 11 of 11
    MacProMacPro Posts: 19,429member
    Can't believe the M2, M3, and M4 rumors are not already flying.
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