Alphabet Inc (NASDAQ:GOOGL) shares have risen 37% over the last year, beating the NASDAQ average. When it reports earnings on February 1, Google is expected to announce over $100 billion in revenue for 2017. If Alphabet meets estimates, the company should show earnings per share (EPS) of $32.33 for the year.

The question for investors: At a time when Google is entering more competitive markets, does 15%  growth in revenue and earnings justify a price of $1,138 per share?

As I’ve written before, Google is no longer just a cloud company, but a cloud-and-devices company. And in this new market, it finds itself fighting against companies just as good as itself, like Apple Inc. (NASDAQ:AAPL) and Amazon.com, Inc. (NASDAQ:AMZN). The company is also working against new political headwinds.

Google Is Still Growing

Despite slowing growth and storm clouds on the horizon, Alphabet stock keeps rising because its earnings multiple keeps rising. The price to earnings multiple is currently at 39, up from 30 a year ago.  Yes, the average S&P 500 stock is now at a PE of 26, but does GOOGL deserve the premium, and does the S&P deserve the price?

Google is now third on Fortune’s list of the most-admired companies, which is great. But the two companies ahead of it are Apple and Amazon, increasingly competitors.

To further branch out, Google is making yet-another attempt to crack the Chinese market, signing agreements with Tencent Holdings Ltd (OTCMKTS:TCEHY), and investing in Chinese technology companies.

Google will benefit more from having its devices manufactured in China than China will from Google’s presence due to the country’s strict internet censorship and policies which don’t favor foreign tech companies.

Where Does Google Go From Here?

Right now, Alphabet is focusing its investments on expanding its cloud footprint, laying more fiber cable globally and trying to crack the developing AI market currently led by Amazon.

It is this competition with Amazon that Google bears are watching most closely. More online shoppers are using search engines to find products than before, but in the U.S., 49% go to Amazon first. Amazon is growing faster than Google in entertainment — thanks to its Alexa speakers and Fire Stick. The two companies are currently dueling across platforms and devices, with moves like Amazon disabling Fire Stick’s YouTube app four days before Google was planning to pull support.

Google appears to be waiting for better wireless technology before moving toward the high-speed internet sector currently dominated by Verizon Communications Inc. (NYSE:VZ), AT&T Inc.(NYSE:T) and Comcast Corp. (NASDAQ:CMCSA). The comany has pulled back on Google Fiber, no longer announcing new cities or even lighting fiber it’s laid in the ground. Experiments with serving homes from poles are continuing. 

The Bottom Line

While Alphabet remains a great company and a good stock, it’s facing new competition on multiple fronts where victory for it is uncertain.

Google’s growth continues to slow, thanks to the law of large numbers. And as its competition with Amazon increases in both cloud and devices, its margins are not going to accelerates.

The company has $86 billion stashed overseas and could bring some of that back to the U.S., benefiting shareholders. But Google is a global company. It needs the cash where it is, and Apple stock didn’t exactly take off like a rocket when it announced its repatriation scheme.

So why again am I supposed to pay a premium PE for this stock?

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Source: Investor Place

Why go to Vegas?

I don’t gamble.

And I’m not into seeing past-their-prime performers like Celine Dion or the Righteous Brothers command the stage.

For me, there’s only one reason…

To get a peek at some of the amazing technology on display at the Consumer Electronics Show (CES).

The massive exhibition attracted 1,200 exhibitors and 185,000 visitors. Adam and I went there last week as guests of Indiegogo and its co-founder Slava Rubin and CEO David Mandelbrot.

The company had one of the bigger booths among the 800 companies at the Eureka Park venue in the Sands Expo halls. Eureka Park, by the way, is reserved for startups only.

Over a sumptuous dinner one evening, Slava told us that an increasing number of visitors to the Indiegogo site are interested in buying equity stakes in companies. Until recently, Indiegogo offered only perks and rewards.

It’s always a positive to welcome aboard a company of Indiegogo’s stature and success. Indiegogo is a true crowdfunding pioneer. Over the past 10 years, it has raised $1.3 billion for 800,000 entrepreneurs.

So why is the company reaching out to us?

Because Indiegogo sees a similar opportunity in equity crowdfunding. The fact that it’s partnered with MicroVentures, a highly regarded equity funding portal and one of our favorites, will make it even easier for us to work with it to find high-quality startup deals.

Tooling around Eureka Park, I saw a number of impressive products. I suspect some of them will end up raising via Indiegogo/MicroVentures.

Below are the five that stood out the most to me. Keep in mind that while I found their technology fascinating, whether they evolve into successful businesses is another matter. As such, don’t construe what follows as investment recommendations.

Aris MD: The things you learn at CES! The co-founder of Aris, Chandra Devam, told me my kidney and lungs are different from yours in shape, location and pathology (or just plain wear and tear). Surgeons aren’t really sure where to cut. They have a general idea, but that’s it. Aris’s virtual reality /augmented reality technology takes a diagnostic image – an MRI, for example – and lets the surgeon practice in immersive reality before the surgery.

I put on these goggles at its booth. And, with a little help, I extracted a person’s brain. What came into view was a 3-D image floating right in front of me. There was no tumor, but if there was, I would have been able to see its true shape, size and depth. Amazing.

Robomart: Imagine tapping a button on your phone and in five minutes, a vehicle packed with fresh food items stops in front of your house. No driver or human to be seen. No cash register to bother with. No money exchanged. You simply take what you want and you’re automatically debited. This will be the model competing with Uber Eats and Amazon’s Whole Foods hookup – not just an order, but a range of selections from the entire food store coming to you.

Hologruf: It’s 3-D, portable and easy to install. Hologruf’s hologram system projects signs and displays that float in midair.

Imagine you’re in an auto dealership and the car drives right up to your seat as a hologram. Hologruf wants to make that a reality. Seeing its holograms up close, I can attest to their outstanding quality.

BLOCKS: You’re familiar with building your own pizza or hamburger… but how about your watch?

It makes perfect sense. Smart watches can now do so many things, BLOCKS founder Omer El Fakir told me it makes no sense to manufacture a one-size-fits-all watch anymore. With BLOCKS, you start off with a core that has smartphone notifications, fitness tracking, Alexa personal assistant and other features…

And go from there.

You can add functions by buying individual modules. For some, that may mean a fingerprint sensor module. For others, an air quality monitor module. Or perhaps all you want is an extra battery module.

My favorite module? Probably the flash memory, which keeps your data safe and close by.

The core costs $259. The modules cost between $30 and $40 each. Would you buy one? I’m tempted.

Olli: Branded as the world’s first 3-D-printed car and first self-driving car to incorporate the artificial intelligence capabilities of IBM Watson, Olli is the brainchild of Local Motors. I took a tour while taking on the persona of a near-blind person. As I entered the vehicle, it told me where I could find a free seat, alerted me to my stop and gave me directions to my destination when I left the vehicle.

Olli has gone through several iterations and is still under development. The company has scheduled several deliveries for mid year, when the Olli team will be monitoring how it performs in different environments and use cases.

It wasn’t easy picking my top five. There were many others I also liked. Hopefully, down the road a bit, I’ll be seeing a couple of these companies on crowdfunding sites.
Technology is just part of the equation of what makes a startup successful in the long run. But developing exciting technologies that also address real needs gives these companies a leg up out of the gate.

It doesn’t get any easier. But having talked to dozens of founders at the show, I think they know that already.

Good investing,

Andy Gordon
Co-Founder, Early Investing

Source: Early Investing 

I’m about to unveil to you another insight on what I believe is crucial to successful investing. And it’s one that is really just basic common sense.

There will always be hot opportunities and glamour stocks that ‘everyone’ is chasing in the stock market. You need look no further than Tesla Motors (Nasdaq: TSLA). I firmly believe though you should not buy the hype, that the best investing opportunities are found just outside the hype.

The classic example of this is the California Gold Rush. Let me take you back in time for a moment.

History Lesson

On May 12, 1848, a San Francisco store owner by the name of Sam Brannan held a ‘one-man parade’ to announce the start of the California Gold Rush. He went up and down Market Street in San Francisco shouting, “Gold! Gold from the American River!”, while waving a bottle of gold dust.

Gold fever took hold and many residents went off in search of riches.

Brannan had good reason for this one-man advertising campaign. You see he owned the general store in that served miners at Sutter’s Mill, where gold had indeed been discovered. And in the intervening week between the actual discovery of gold and his ‘advertising campaign’, Brannan had bought all the picks and shovels in the city.

Needless to say, Brannan became the Gold Rush’s first millionaire. And a timeless investing maxim was born, “when there’s a gold rush, sell shovels.”

It is this line of reasoning that led me to a recent addition to the Growth Stock Advisor portfolio. It is a leading provider of microcontrollers. But before I give you the details on it, let me fill you in on the microcontroller market and why you need to be invested in it.

What Is a Microcontroller?

A short definition of a microcontroller is that it is a tiny computer on a single integrated circuit containing a processor core, memory, and programmable input/output peripherals.

Microcontrollers (MCUs) are used in automatically-controlled products and devices. Examples include vehicle engine control systems, implantable medical devices, remote controls, power tools, appliances, smartphones and other embedded systems. Microcontrollers are also used in our smart credit cards and electronic passports.

By reducing the size and cost, microcontrollers make it economical to digitally control more and more devices and processes. In simple terms, the entire wonder that is supposed to be the Internet of Things (IoT), with 30 billion connected devices by 2020, would not be possible without microcontrollers.

MCUs are a low-cost and low-power bridge between the sensor and gateway parts of IoT devices. They link sensors to the IoT nodes and serve as sensor hubs in a wide array of IoT devices to gather and log data onto a network.

Microcontroller Market

The IoT microcontroller market is segmented based on types, which are first sub-divided into 8 bit, 16 bit and 32 bit MCUs with 32 bit being the largest segment thanks to its higher processing power. MCUs are also segmented on the basis of application – consumer and home appliances, automotive, industrial, medical, security ID, solar PV and smart grid.

The global microcontroller market is experiencing robust growth at the moment that is set to continue. The period from 2017 to 2024 is forecast to have approximately a 16% compound annual growth rate (CAGR).

(World Microcontroller Market, 10 Years Leading to 2024, in Billions USD)

Demand in key application areas such as automotive, consumer electronics, smart grid systems, solar power and healthcare is feeding that growth. The biggest future driver behind the growing demand for microcontrollers will be the Internet of Things, robotics and factory automation.

However, do not overlook the automotive market. Traditionally, automakers have used MCUs for engine control, anti-lock brakes, power steering, airbags and other applications. But now, microcontrollers are also needed in sophisticated safety features such as advanced driver assistance systems (ADAS).

Yet, despite the soaring demand, the industry has gone through tough times.

MCU Market Upswing

The problem for the industry has been too many players producing too many microcontrollers, driving down prices and profits. For example, between 2006 and 2015, the average price for an average 32-bit MCU fell 17% per year from $5.00 in 2006 to $0.92 in 2015.

But that is beginning to change, making it the right time for you to invest in the industry.

According to research firm IC insights, the average overall price for microcontrollers in 2016 rose 8% in 2016 and will rise another 2% in 2017. Going forward, it sees a steady climb in prices – due to that overwhelming IoT demand – up 3% in 2018, 4% in 2019 and 1% in 2020.

The price for that average 32-bit MCU increased 18% to $1.09 in 2016. Keep in mind that this is the largest segment of MCUs, and will account for 60% of total MCU revenue and 43% of unit volumes this year. These price increases will mean, according to ICU, that revenues for the industry will be in excess of $25 billion.

That’s a very positive trend. And so is the industry’s move toward consolidation, as companies jockey to be best positioned for a future dominated by the Internet of Things.

You’ll Need a Scorecard

The moves made in this bid for supremacy have scrambled the standings of the top companies in the MCU industry. You’ll need a scorecard to keep track. But let me briefly fill you in on the global standings, as of the end of 2016.

The former number one company is now number two, Japan’s Renesas (OTC: RNECY) and its 16% market share.

The new number one (19% market share) is NXP Semiconductors NV (Nasdaq: NXPI), thanks its purchase of Freescale in 2015, moving it up from sixth. NXP itself is now the subject of a takeover bid from Qualcomm (Nasdaq: QCOM).

Fourth through seventh are: Korea’s Samsung (12%), STMicroelectronics NV (NYSE: STM), Germany’s Infineon Technologies (OTC: IFNNY) and Texas Instruments (Nasdaq: TXN). Coming in eighth is Cypress Semiconductor (Nasdaq: CY), which moved up the standings thanks to its purchase of Spansion in March 2015.

Our recommendation of Microchip Technology (Nasdaq: MCHP) is now third globally, up from fifth, with a 14% share of the global market. Its 2016 sales rose 50% to $2 billion due to its $3.4 billion acquisition of Atmel in the second quarter of 2016.

Microchip Technology

Let me fill you in now on Microchip Technology, whose microcontrollers are likely all through your home – from your garage door opener to your coffee machine to your children’s or grandchildren’s toys.

It had a tough start in its corporate life. It was a failing spinoff of General Instrument that was acquired by venture capitalists in 1989. It went public in an IPO in 1993. Luckily, it has had good management teams and has grown through the years via acquisitions until today it is a major producer of microcontrollers (64.3% of revenues), memory and analog semiconductors, and interface products for embedded control systems.

I believe the purchase of Atmel last year was a game changer for MCHP and did a lot more for the company than just moving it up the market share standings. It is now one of the best positioned companies in the entire industry.

Prior to the Atmel purchase, the company had been the only major MCU supplier not licensing ARM CPU technology. This architecture comes from the U.K.’s ARM Holdings, which was snapped up by Japan’s Softbank (OTC: SFTBY) in 2016 for $32 billion.

For about a decade, Microchip Technology had developed and sold 32-bit MCUs based on RISC-processor architecture developed by the U.K.’s MIPS Technology, which is now owned by another U.K. firm, Imagination Technologies. The latter was a major Apple supplier, which was recently dumped by Apple.

But with the proliferation of Internet of Things devices, the ‘wind’ is clearly blowing in the direction of 32-bit MCUs using the low-power ARM architecture. Atmel’s strength is that it is strong player in the ARM microcontroller market.

Security too is of major importance in any IoT designs. Here again, Atmel is a big plus for MCHP. Its expertise in technologies such as Trusted Platform Module (TPM) and crypto memories can complement Microchip MCUs in securely connecting objects.

Consistency Is Key

As with my other recommendations, I look for companies with good global exposure. That is crucial here since overall the Asia-Pacific region accounts for about 35% of the microcontroller market. This region did account for 55.8% of net sales in the Microchip Technology’s latest quarter.

Its revenues aren’t overly dependent on any one sector either. The last quarter’s breakdown on its MCU segment among the major users is as follows: industrial – 35%, automotive – 25%, consumer – 24%.

Another item I like to see from a company is consistency. Despite the tough times in recent years for the industry as a whole, the company has managed to report 106 consecutive quarters of profitability!

Microchip Technology is now one of the fastest-growing global providers of 16-bit and 32-bit microcontrollers. This business continues to outperform the industry, which I think will enable it to continue gaining significant market share. Its analog business (about 25% of revenues) is also fast becoming one of the biggest analog franchises in the market.

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Source: Investors Alley

Amazon.com, Inc. (NASDAQ:AMZN) has come a long way with Alexa, proving that the company is more than an e-commerce retailer.

Amazon Echo and Echo Dot devices are the future of smart home devices, connecting virtually every area of your home with voice commands. Not only does Alexa connect your voice with your TV, music, video and lights, but it is also connected to your kitchen now.

The company has developed a software that connects the voice assistant with your microwave oven. Naturally, you’ll need a microwave oven that is designed to connect with Alexa, but plenty of appliance makers are taking the initiative to make this happen.

Companies such as Whirlpool are creating their own Alexa skills for your microwave, further promoting the integration of Amazon’s technology with elements of your everyday life. GE Appliances, Kenmore, LG and Samsung are also creating microwave ovens with Alexa skills.

Instead of pressing the buttons of the microwave, you can ask Alexa everything from helping you to defrost four pounds of chicken, make popcorn, heat up your leftovers or set up a timer for something that’s cooking elsewhere.

The companies that are teaming up with Amazon’s voice assistant plan on going beyond the microwave oven as they are creating other appliances that link up with Alexa. Amazon is investing in June Life, the company that created the June Oven, which uses voice commands to cook your food in an easy and convenient manner.

AMZN stock gained about 0.3% on Thursday afternoon.

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Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
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Source: Investor Place

Twenty years ago, we arrived on the surface of another planet. This marked one of the most important moments in space exploration history. It was 1997: the first successful touchdown on Mars via the Pathfinder rover.

Now, space exploration has expanded beyond our own government program, NASA. It has become the passion of some of the most revered, forward-thinking minds in the world.

In 2000, Amazon CEO Jeff Bezos began a side project called Blue Origin. Although most of its activities are kept somewhat secret, Bezos has stated that its near-term goals involve space tourism and satellite TV. Then, in 2002, Elon Musk began a company called SpaceX. This company was started with the sole purpose of colonizing Mars, even before Musk founded Tesla.

Right now, a main goal of NASA is to be the first to have a manned Mars mission. And now, there is increased competition from private companies, SpaceX in particular, as well as a multinational race, similar to that of the race to the moon.

It would be great to be able to invest in a company with such a unique and monopoly-like focus as SpaceX and Blue Horizon, but unfortunately that’s not an easy option; these companies are not publicly traded. However, I believe the next best option is investing in the systems that make these companies’ rockets “go.”

Rocketing Into History

About 98% of the material that’s launched into the sky during liftoff is related to propulsion. And it doesn’t just get the rocket off the ground. Complicated propulsion systems are also necessary to maneuver the ship once it’s in space.

It’s a relatively small aerospace and defense company here in the United States. Its specialty is propulsion systems, which comes in handy when working with rockets and other space-traveling vehicles. In fact, it’s the largest producer of space propulsion and power systems in the U.S.

The company also has a huge client for whom it does most of its business: NASA.

In the past, most of the business it has done for NASA involved the space shuttle. This includes 30 trips to and from the International Space Station; it also supplies the batteries used to keep the station running. In fact, the propulsion system that it designed and built guided the shuttle for 135 missions with a 100% success rate, making it the world’s most reliable rocket ever built.

But going forward, one of the major reasons for demand will be American-manned space launches. Although we have not had a manned space launch since 2011, this activity will be revitalized with the goal of making it to Mars.

This will be done via NASA’s Space Launch System (SLS), which is expected to take off for the first time in 2019. But the SLS is just the launching vehicle; the crew capsule that will carry the passengers is called Orion, and the company I’m recommending today is making the propulsion system for just about every component for both of these crafts.

It really is making history with this project, as no manned spacecraft has ever been designed to take humans into deep space, potentially to Mars and even the asteroid belt.

Another project this company has been selected to work on is the propulsion system for the Defense Advanced Research Projects Agency (DARPA)’s Experimental Spaceplane. In this project, it is collaborating with Boeing to make a hybrid airplane/traditional launch vehicle that will be used to send military satellites into space.

The Defense Department’s goal is to have this vehicle fully functional and tested by 2020. So, while this is a smaller project, it is still something coming up within the next few years.

A Sudden Growth Phase

Of course, any company can sound like a great investment, but it still has to be financially stable to actually be a great investment.

That’s why I believe Aerojet Rocketdyne Holdings Inc. (NYSE: AJRD) is on the verge of newfound growth in revenue due to the revitalized space program.

This year, its first-half sales increased by 13% after just 4% growth over the previous two years combined. And over the past year, expectations for revenue have grown from $1.78 billion to $1.9 billion. A year ago, Aerojet wasn’t supposed to make $1.9 billion until 2020.

You know a company is in a sudden growth phase when its expected revenue is accelerated by three years. And Aerojet has already booked $4.3 billion worth of future projects.

Lastly, when a company enters a growth phase, it’s important to make sure it has enough cash to fund its future operations. Over the past two years, Aerojet has brought in over $350 million in cash from operations, essentially doubling its cash position in anticipation of its projects ahead.

Looking at Aerojet’s stock price, it’s obvious that the market has discovered the company’s growth potential. The stock has gone up about 100% over the past year. But I still believe it has plenty of room to grow going forward.

As a company, Aerojet is still valued at only $2.4 billion, which is less than 1.5 years’ worth of revenue. And soon enough it’ll be making more than that in just one year.

Overall, in the aerospace and defense industry, it is the seventh-cheapest company in terms of valuation out of 28 companies, and that’s after its price went up 100% in the past year.

Clearly, as Aerojet continues to grow, more and more investors will realize its potential and buy into its stock.

Regards,

Ian Dyer
Internal Analyst, Banyan Hill Publishing

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“I’ll meet you at Pilot” my future wife said to me before hanging up the phone.

She was explaining to me how to get to her parents’ house. (This was before our phones were a GPS device.)

But by meeting me at the Pilot gas station, I knew exactly where that was.

In the town she grew up in, it was a local landmark. Right off the highway, Pilot always had the cheapest gas and was a spot everyone knew of.

That was over 10 years ago, though.

However, even though it is just one of many gas stations with competitive gas prices across the country, legendary investor Warren Buffett felt the value was now ripe for an investment.

Last Tuesday, he announced his company, Berkshire Hathaway, would buy a 38.6% stake in Pilot Flying J, which operates the little truck stop I was meeting my future wife at.

To me, Warren Buffett is clearly going against one of his investing rules — never buy a stock you are not comfortable owning for 10 years.

And if you typically follow Buffett’s investments, this is one you should pass on. Here’s why.

Warren Buffett: The Oracle of Omaha

I have a lot of respect for the Oracle of Omaha. Who wouldn’t? Warren Buffett is the world’s third-richest person, and his success story is one of the greatest.

Many investors idolize him and simply buy whatever he buys.

However, I think he is making a mistake on his latest acquisition, Pilot Flying J.

It actually goes against one of his main rules, if you ask me.

I have used his No. 1 rule before, which is to never lose money, but he has a few other rules to invest by. One of them is to never buy something you don’t want to own for 10 years.

That’s his investment time frame in a nutshell. “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

But Buffett’s latest acquisition is one I am uncertain about in just five years, and I question its existence 10 years from now.

Still, that hasn’t stopped investors from chasing his trade.

TravelCenters of America LLC (Nasdaq: TA) jumped 10% on the news, without even knowing the financial details of the transaction. That’s partly because the announcement of the Pilot acquisition mentioned Berkshire Hathaway’s capital and ability to expand, and TravelCenters may be one acquisition it is eying.

However, I doubt the usefulness of a truck stop/gas station in a future that is going electric and self-driving.

Going Electric

I find it extremely ironic that Warren Buffett made this acquisition in the same month that Tesla planned to unveil its electric, self-driving semitruck. Granted, it is several years away from being operational, but the fact remains that in five years, almost all of the new cars being released will be electric, as indicated by the major automobile manufacturers.

I’m sure Buffett has thought about this, and still finds the real estate that Pilot owns to be a worthy acquisition. But to me, in just five years this is a company that will be searching to find its place in a world that is going electric and autonomous.

Does Pilot just become a place to stop on long trips and use the restroom? Somewhere to get junk food? Or will it be branded as a completely different use? I don’t know.

But I do know that when major manufactures like Ford, General Motors and BMW make the shift over the next few years to an almost entirely electric and automatic fleet, the amount of charging stations will multiply. And I may be five years off, but that brings up Buffett’s 10-year time frame, and I don’t know what a gas station will be like in 10 years.

I just know it won’t be your typical gas station anymore. Because instead of having to stop at a gas station before you get home, you’ll simply charge up at your house.

And instead of having to stop for gas after a 300-mile trip, you’ll simply pull into the hotel and charge up while you stay there.

So this is not an investment I would want to own for the next 10 years. And I think trading TravelCenters is a risky bet at the moment too.

If you buy it, you’re hoping Berkshire Hathaway has its sights set on that company. Because if it doesn’t, TravelCenters will likely fall back. But betting against it is too much of a risk because of the possible acquisition.

For now, this is simply not the investment to follow Warren Buffett on. And I don’t say that often.

Regards,

Chad Shoop, CMT
Editor, Automatic Profits Alert

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Source: Banyan Hill 

Apple is doomed. And 2018 is the year where I believe you’ll start to see that this once-great American company has peaked and the Apple stock price is ready to decline.

Truthfully, I’ve been wrong on Apple Inc. (Nasdaq: AAPL) stock for a year now.

Driven by Warren Buffett’s huge buying spree — over $20 billion in shares — the Apple stock price has gone up, up and up.

This has happened despite its business being stagnant or in slight decline, depending on which quarter you look at.

That memory is of Steve Jobs introducing truly revolutionary products.

Like the iPod in October 2001, which by allowing you to carry tens of thousands of songs in your pocket transformed the way you listen to music.

Like the iPhone in June 2007, which shrunk a computer so that you could have access to everything you used to use your desktop computer for.

Like the iPad in April 2010, which perfected the tablet computer as an alternative to laptops.

But then Jobs died in October 2011. Since then, Apple has introduced no new revolutionary products.

Instead, Apple now tinkers with models, sizes and colors. Apple sells five different models of its iPhone. You can get them in six colors and in multiple sizes.

Apple’s latest phone, the iPhone X, has facial recognition and an OLED display.

Some people think this is a big deal. Steve Wozniak, one of the co-founders of Apple, thinks it’s no big deal at all.

“I’d rather wait and watch that one. I’m happy with my iPhone 8, which is the same as the iPhone 7, which is the same as the iPhone 6, to me,” says Wozniak.

Now there’s an even bigger thing happening. One that guarantees that Apple’s future is one that’s going to disappoint the people who have been buying its stock.

An Incredible Red Flag for the Apple Stock Price

That thing is the Chromebook. A Chromebook is a cloud-based computer that uses Google’s software.

Chromebook sales are on fire in a market that Apple used to dominate: schools.

Chromebooks now have an astonishing 58% market share in K-12 schools.

Even my kids use Chromebooks. Their school uses Google’s cloud-based word processing, spreadsheet and presentation apps.

People looking at the Apple stock price through the eyes of iPhone sales are going to miss this incredible red flag.

You see, Apple’s brand, reputation and customer loyalty begin with kids using its products.

I believe that Apple’s seeding schools with computers set the platform for Apple’s success. By the 2000s, those kids had jobs and money, and had formed a connection to Apple because their first exposure was through the company’s computers.

Steve Jobs confirmed this in a 1995 interview:

One of the things that built Apple IIs was schools buying Apple IIs. … We realized that a whole generation of kids was going to go through the school before they even got their first computer, so we thought the kids can’t wait.

Now Google is forming that relationship with kids. Already my kids and their classmates are learning to use Google by using voice commands instead of typing.

Amazon is forming that relationship with kids as well through the use of its Echo devices and Alexa platform.

The Innovation Race

Using voice instead of a keyboard is a revolutionary shift in how we use computers. This is a revolution you can see unfolding slowly right now through the sales of speakers that connect to cloud platforms like Google Assistant and Amazon’s Alexa.

Apple had the lead in this market when it introduced Siri in October 2011. However, since then, it stopped innovating and improving Siri. It let Amazon and now Google overtake it.

And I believe that because Apple’s focusing on tinkering rather than innovation, Amazon and Google’s lead are only going to increase while the price of Apple stock declines.

Apple wiped out the old cellphone leaders — Nokia, BlackBerry and others — because those companies sat on their lead and tinkered instead of innovating. I believe the same thing is going to happen to Apple.

Now, the Apple stock price continues to go up because investors like Warren Buffett are willing to bid it up. Plus, the company is buying back billions of dollars in stock each quarter.

However, this doesn’t change the fact that Apple is now losing “mind share” among the customers of the future — kids — and losing the innovation race by falling behind in the next wave of computing, which is going to be in voice-based cloud platforms. Watch in 2018 for the decline in the Apple stock price.

Regards,

Paul Mampilly

Editor, Profits Unlimited

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Source: Banyan Hill

Digital reality, which includes augmented reality (AR) and virtual reality (VR), is set to grow to a $162 billion market by 2020, according to IDC. And I personally believe AR is set to be the winner in this market, for a few reasons.

First, augmented reality doesn’t require the user to wear a big, clunky headset. Nobody wants to wear that for hours; it’s uncomfortable if worn for long periods of time, and you have to take it off to do anything else. With the amount of time that people spend multitasking now, that won’t work.

The only alternative right now is being in a “virtual reality booth.” While it looks interesting, people aren’t going to have these big spaces set aside in their homes.

So the second reason VR won’t be as big is because selling to individual consumers is the only way that anything new in the gaming industry can get off the ground nowadays.

I do realize that VR gaming headsets are selling well. There is a place for them, and they will be part of the bigger digital reality picture. But I believe that AR will end up being the dominant force in this market.

So what is augmented reality? Put in basic terms, it’s anything projected on a screen or display that isn’t really there.

An example that everyone has seen is the yellow line during football games that marks the next first down. It’s actually been around since 1968, although it doesn’t look anything like it used to (thankfully).

There was also Google Glass, which was Google’s own AR “headset” in the form of glasses. The product was highly anticipated by the tech market, but not really anyone else.

Its release in 2014 was a bust, and it was discontinued the following year. That was primarily due to its $1,500 price, as well as the fear that Google was secretly recording people.

But now, this technology is exploding to the point where we could use it multiple times every day.

Virtual Shopping and Augmented Reality

At this point, most AR is done through smartphone apps, which is convenient because our phones are always right in front of us.

For example, Amazon has an app called Amazon AR that allows customers to visualize its products in the real world:

One of the main reasons that people don’t want to shop for home goods online is because they want to be able to actually see the product in real life. But until now, this involved having to go to the actual store and then imagining what the product would look like at home.

The AR technology in this app lets you actually see a virtual version of the product in real life, which eliminates having to go to the store to pick something out. Shopping online is quicker and easier for browsing, too; you have hundreds of products right in front of you, and now you can see what they would look like in your home.

Ikea has a similar app called Ikea Place. One of the most tedious parts of buying furniture is having to measure all of the dimensions and then trying to estimate if the piece of furniture that you want will fit. But with the app, you can see what any “actual size” piece of Ikea furniture would look like in your home.

Augmented Reality Has Hundreds of Different Uses

Augmented reality is also proving its worth to manufacturing companies. For example, Ford and Volvo are using AR in their automobile design process. Now, instead of having to build a physical clay model of every car, they can visualize it with augmented reality:

This technology can save a lot of time and money that’s spent fixing mistakes and guessing how to create or improve an automobile’s functionality. Once this product is fully integrated, it will get rid of the entire prototype phase of automobile design, allowing manufacturers to roll out new models more often.

We can already get a glimpse of what else is to come with AR, as there are hundreds of different uses being figured out and developed.

Sticking with automotive uses, there’s an app being developed by a company called AR-media that lets you track maintenance and perform repairs on cars:

The app is called I-Mechanic, and it could really save people a lot of money by showing them how to perform routine maintenance on their cars.

Volkswagen actually was a pioneer with this technology when it created an app that could be used with its XL1 model. While it had the right idea with the technology, only 200 of those cars were ever sold to the public, so nobody could really use the app.

I-Mechanic will be available to use with a variety of car models, building on what Volkswagen started.

Lastly, believe it or not, there is a technology being developed to turn your windshield into an AR station:

While a “smart windshield” may be a distraction for drivers, the real potential here would be with self-driving or assisted-driving cars. The person in the car could use the windshield for things like GPS or getting information on nearby points of interest.

Investing in Augmented Reality

Augmented reality has taken the tech market by storm over the past couple of years, and it’s only just starting. For all the apps and features that I’ve explained here, there are hundreds more in existence or development.

There are also ways to invest in this technology.

Companies like Snap Inc. (NYSE: SNAP) and Apple Inc. (Nasdaq: AAPL) are creating augmented reality platforms that are being used every day by individuals and companies alike.

In 2018, I believe we will see exponential growth in the augmented reality market, and a significant immersion of the technology into our daily lives.

Regards,

Ian Dyer

Internal Analyst, Banyan Hill Publishing

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