Alright! Can Apple still help you achieve financial freedom? Both stock guru Warren Buffett and China's stock guru Duan Yongping have successively reduced their holdings in Apple. Does this signal that Apple's reign is over? Does the enthronement of the new king, Nvidia, herald a new era driven by AI? Today, we will discuss Apple in detail, and we will also talk about Booking and Applied Materials. Welcome to this episode of Tang Shijun's Wealth Experience.

If this is your first time watching my video, my name is Tang Shijun. I previously worked in e-commerce within Alibaba's ecosystem for 10 years. Currently, I am an accountant at an accounting firm in Australia. I entered the financial market in 2015. Although I experienced many failures and lessons learned, I also seized many opportunities. I am fortunate to have outperformed the S&P 500 index. My channel does not offer trading calls, price predictions, or buy/sell signals. My content has only one purpose: to help you achieve freedom and happiness through investment.

Apple has exited its peak performance stage. I have held Apple for 1122 days. Let's look at a chart. My average holding price is 155.88. My current Compound Annual Growth Rate (CAGR) is 20.2%. Compared to the S&P 500, it's slightly behind. This position has not outperformed the market, but it's not far off. If you look closely, even in capital gains, Apple's performance is even better, only slightly trailing in dividends. Additionally, I live in Australia, so my investments are affected by exchange rates. From an exchange rate perspective, my Apple holdings have also not outperformed the market. However, I generally do not consider the impact of exchange rates. Therefore, overall, I believe my Apple holdings have performed essentially in line with the market.

AI 浪潮下的价值锚点：苹果的生态护城河与增长隐忧

Apple remains a leader in its core areas. In terms of phone shipments, it is the largest player globally, often alternating the top spot with Samsung. Although Samsung's shipment volume is comparable to Apple's, Apple's phones sell at a significantly higher price, resulting in much greater revenue and operating profit. Apple独占了全球手机行业46%的营收占比, meaning it captures almost half of the global mobile industry's revenue, while Samsung, ranked second, only holds 15%.

Beyond phones, Apple is also the world leader in tablets. Its shipment volume for iPads accounts for 38% globally, and given the premium pricing of iPads, its revenue share in this segment is likely even higher, estimated at around 70%. Apple's third major hardware pillar is personal computers. While not having absolute dominance like in phones and tablets, it is one of the top three PC manufacturers globally, with a market share of approximately 17%. Furthermore, in the wearables segment, such as the Apple Watch, it is also a global frontrunner.

Apple faces significant competition, especially in the phone market, from various Android ecosystem manufacturers like Samsung, Xiaomi, Vivo, Oppo, and Huawei. While these companies are constantly striving to capture Apple's market share, Apple maintains its position, particularly in the high-end smartphone market, where these competitors' offerings have yet to shake its dominance. Xiaomi, in particular, has seen substantial success in the mid-to-low-end market.

Apple's strength lies not just in its hardware but significantly in its iOS ecosystem. Over years of development, Apple has seamlessly integrated all its products, creating a truly fluid and interconnected experience. This forms the bedrock of Apple's moat. I believe Apple is the best company globally in terms of ecosystem stickiness. Once users enter the Apple ecosystem—by purchasing an iPhone, an iPad, a MacBook, an Apple Watch, etc.—their entire digital life becomes deeply bound to iOS. iMessage and the App Store become almost indispensable. For instance, as an Apple phone user myself, switching to a brand like Huawei would mean abandoning years of apps purchased on the App Store, requiring new purchases on the Android ecosystem, and potentially replacing my iPad and Apple Watch. Moreover, I am accustomed to the iOS operating system, and switching would involve a learning curve, a hassle I, and likely most people, would prefer to avoid. This high switching cost is a key reason why Apple's moat is so formidable. Personally, I don't foresee switching unless a revolutionary new device like the iPhone emerges.

The concept of a moat is frequently discussed on my channel, with various levels of strength. High switching costs are among the strongest, and Apple is arguably the world leader in this aspect. Secondly, Apple benefits from network effects. The App Store hosts 1.7 million apps across entertainment, productivity, and education, making it the preferred platform for developers. Combined with Apple's massive user base, who are typically consumers with strong purchasing power, this creates a virtuous cycle: increasing demand attracts more supply, and vice versa. This dynamic explains Apple's spectacular performance over the past decade.

Finally, I want to emphasize Apple's pricing power. Over the years, Apple has demonstrated an exceptional ability to set prices, a trait Warren Buffett values highly when investing in a company. This is also a critical factor in my own scoring system, contributing a full ten points. While CEO Tim Cook has faced criticism in many areas, his strategic execution, particularly in supply chain management and the rhythm of new product launches, is undeniable.

Looking at Apple's latest financial report, its financial health is robust. It generates $98.048 billion in free cash flow annually, sufficient to pay off all its debt. Its Leverage Ratio (LLC) is a staggering 59.19%, yet it continues to grow revenue to new highs, reaching $400 billion in the last twelve months. Operating expenses are manageable relative to its scale. While $32.058 billion in expenses might seem high, it's not excessively so for a company of Apple's size. Capital Expenditure (CAPEX) is relatively low. Notably, Share-Based Compensation (SBC) is low at 12.2%, and its dividend payout is stable. Apple engages in significant share buybacks, spending $106 billion in the last twelve months.

Based on this, Apple scores 84.5 in my system, with a perfect score for subjective pricing power. It ranks seventh among all companies I've analyzed. Its lowest-scoring area is revenue growth speed, which is also the primary reason for market criticism. Many investors believe Apple's high-growth era is over, especially with prominent investors like Buffett and Duan Yongping reducing their holdings. Consequently, many have exited their Apple investments.

However, I don't believe Apple will become worthless. Investors' main concerns are its slowing growth and its apparent lack of progress in autonomous driving and AI. While Google, Microsoft, and Amazon are engaged in an AI arms race, Apple, this behemoth, remains largely on the sidelines. It's remarkable that Apple spent $106 billion on share buybacks in a single year. I surmise Apple's management is strategically avoiding resource-intensive, low-margin endeavors. They outsource hardware manufacturing to Foxconn rather than managing it themselves. They also avoid price wars with competitors in the low-end Chinese market, always prioritizing their profit margins. For instance, iPhone 5 shipments were comparable to Samsung's, but Apple's revenue and profit were vastly different. Therefore, it's understandable that Apple may be hesitant to invest heavily in low-margin areas like autonomous driving or large AI models, as these could become commoditized, leading to price wars. Considering Apple's dominant ecosystem, which is arguably the best asset globally, any AI model developed by Google, Meta, Microsoft, or Alibaba will ultimately be presented to consumers through the App Store and Apple's diverse hardware devices. Thus, I believe Apple's ecosystem remains its most valuable asset, and it continues to lead in this domain.

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Booking.com：OTA巨头的市场主导与竞争挑战

Booking Holdings is not just an undervalued company but also a leader in the global Over-The-Counter (OTC) market, especially showing remarkable advantages in the hotel booking sector. In Europe, Booking enjoys a cliff-edge lead, holding approximately 70% of the market share, while its competitor Expedia holds about 14%. In the United States, Booking and Expedia together dominate nearly 90% of the market. In Asia, Booking faces another competitor in Ctrip (now Trip.com Group), the leader in the Chinese market.

Focusing on the short-term rental and homestay segment, Airbnb is a major competitor to Booking. Airbnb boasts the largest number of homestay listings globally, commanding approximately 44% of the short-term rental market share in 2024.

Another entity worth mentioning is Google's potential impact. Investors often overlook aspects like Waymo, Google's autonomous driving subsidiary, which has a clear lead over other autonomous driving companies. However, the market tends to disregard this business when valuing Google, viewing it as insignificant compared to Google's core operations. This is despite Waymo's potential for future growth. The "Google decline" I refer to here is its hidden threat to OTA companies. By leveraging its search engine's dominant entry point, Google siphons off a portion of OTA traffic. Furthermore, OTA companies spend substantial amounts on Google ads, with estimates suggesting that a significant portion of their advertising budget goes to Google. Consequently, these companies have been trying to leverage their own network effects to increase direct booking channels and reduce reliance on Google.

Booking's moat primarily relies on its powerful network effect. Over the past decade, Booking's scale has grown, which itself is a moat. Its network effect stems from two key aspects: first, a highly diversified global inventory of accommodations, and second, an ever-increasing volume of bookings from a massive user base. As mentioned, especially in Europe, Booking is indispensable for many independent hotels.

Booking's pricing power is also first-class. It maintains high commission rates and its own pricing control due to its indispensable traffic. Surveys indicate that many European hotel owners find the 15% commission rate excessive, yet they have no alternative. During peak seasons, they are willing to pay higher commissions for more bookings, and during off-seasons, they rely heavily on Booking's traffic support.

Looking at Booking's latest financial report, its financial health is strong, with cash that can directly pay off debt. The latest quarter shows a remarkable cash-to-debt ratio of 61.79%, higher than Apple's. The growth rate of this ratio is astonishing. Both revenue and net profit have reached new highs. We also observe that the company is very adept at generating cash, with its operating cash flow significantly exceeding its net profit. The company has low SBC and CAPEX expenses, stable dividends, and a very strong share buyback program. Following the latest financial report, Booking scores 87 in my system, a very high score that has seen it climb several ranks this quarter, placing it fourth among all companies I've analyzed. The company appears to have no discernible weaknesses and meets all my investment criteria. The reason I haven't yet built a position is that I am not a Booking user; my family uses Ctrip. However, I notice many cases handled by my accounting firm use Booking. Based on its fundamental performance, Booking is exceptional. If an opportunity arises, I would consider investing.

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AMT：半导体设备巨头的技术壁垒与股东价值

Will Applied Materials (AMT) outperform the market in the future? The reason I sold my Apple position was not because I was bearish on it, but because I found a better opportunity. I rotated into [unclear reference, possibly a stock ticker like 'Bluetooth' or 'BT'] during the previous tariff collapse. Now, looking back, what is AMT's future outlook? Today, we will discuss it in detail.

Applied Materials (AMT) is one of the world's largest suppliers of wafer fabrication equipment. As regular followers know, the global semiconductor equipment market is already an oligopoly. The top five players are ASM International, Lam Research, Tokyo Electron, and AMT. Two years ago, Lam Research was the largest company in this industry, but AMT has now surpassed it. Currently, AMT holds approximately 19% market share in the global semiconductor equipment market. Its strongest area is in semiconductor manufacturing equipment, where it holds about 30% of the global market share. In the etching field, Broadcom is the dominant player, holding about 60% of the global market share. While Lam Research is the king of etching, and Broadcom holds significant market share, AMT also has a considerable share in the testing field. Without exaggeration, AMT covers almost all areas of the semiconductor equipment market except for lithography. It is truly a one-stop shop.

Here, I must mention one point: In the deposition field, AMT is unparalleled globally, with no competitors. It is indispensable for advanced node technologies.

Next, let's discuss AMT's moat. Its moat's greatest feature is its strong technical moat. This is primarily reflected in its vast patent portfolio and continuous, massive R&D expenditures. For example, AMT holds over 29,000 patents, which is a leading position in the industry and a significant advantage over competitors.

Furthermore, AMT's equipment exhibits high stickiness. This is easy to understand because AMT doesn't just sell equipment; after delivery, there are continuous services for maintenance, repair, and upgrades. These service contracts are typically signed for three to five years. Thus, high switching costs are another key aspect of AMT's strong moat. Therefore, AMT's moat is fortified by a combination of an extremely high technical barrier and significant switching costs.

AMT also possesses strong pricing power. I've noticed its profit margins have been steadily increasing over the years. This is a rare achievement. Management has repeatedly stated they do not engage in price wars, but rather support their high prices by providing higher value through technological leadership. This is also reflected in its fundamentals, giving management a solid basis for their claims.

Let's look at this chart displaying AMT's latest financial report. First, we observe its financial health. Its cash flow is sufficient to cover its debt directly. AMT's performance is good, with a cash-to-debt ratio of 16.51%. While two companies in this video have such high ratios, it doesn't mean all companies do; 36.51% is already excellent. Revenue is at a new high, and net profit is also strong. Operating expenses are significant, and SBC is not too high. CAPEX is also substantial. The company's dividends are stable, and it engages in significant share buybacks.

Following the latest financial report, AMT scores 79 in my scoring system, which is already very high. Aside from significant investment in personnel, the company seems to have no other major issues. Its fundamentals show no obvious weaknesses, demonstrating a very balanced performance. While AMT is not a company with exceptionally fast growth, it highly prioritizes shareholder interests. Looking at this chart, its dividend payout shows steady, continuous growth. Next, let's look at this chart showing its circulating shares, which are visibly decreasing.

Although I have cleared my position in AMT, as I mentioned earlier, I remain very optimistic about it. However, I am a concentrated investor. If my portfolio were to include twenty core positions, I would likely continue to hold AMT. But if I maintain only about ten core, heavily weighted positions, I would currently not hold it.

That concludes this episode. The research reports I publish are only a small part of the complete reports. If you wish to access the full research reports, which I use daily, and track my real-time trading and holding information, you can consider subscribing to my membership. If you subscribe now, you can get a one-month free trial. I recently established a new "compound interest machine" stock. If you want to know which one it is, don't miss that video. Thank you for watching, and I wish you successful investing. See you next time.