In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss:
- Apple's smart home push.
- The premium pricing problem.
- ASML's semiconductor monopoly.
- AI demand and valuations.
- China's luxury slowdown.
- Luxury stocks on sale.
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A full transcript is below.
This podcast was recorded on Oct. 14, 2026.
Travis Hoium: Can Apple take over the home? Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I’m Travis Hoium. I’m joined today by Lou Whiteman and Rachel Warren, and guys, Apple came out with some new products yesterday. That wasn't the big show that they often put on, but these were some pretty notable product line expansions. Rachel, we've got some new home security systems. They didn't quite call it security systems, but security cameras, doorbells, indoor cameras, pretty high price point compared to what we've seen in the past. Some of these things are $300 instead of under 100, which you can get from a lot of these services. Then the other thing is the HomeView, which is essentially an iPad with a speaker for $300. Are you going to buy one of these?
Rachel Warren: I'm not necessarily waiting in line to buy one of these. I'm saying that as someone who's pretty locked into the Apple ecosystem as a consumer. I'm a longtime Apple shareholder, so I'm not a hater here, but I don't think this is the most revolutionary thing they've put forward. Now, just to talk a little bit about what they've released. They launched HomeView. This is a $299 Smart Home command center. It's got a seven inch liquid retina screen. It's got the 18-chip camera that's available in Tabletop or wall-mounted versions. Then Apple also debuted what they're calling the Apple Home collection. It's essentially a curated storefront of premium accessories, cameras, and thermostats, deadbolts, and they co-develop these with Schneider Electric and LG Electronics. Now, what's interesting is HomeView. You've got your typical multi-user facial recognition.
They've got widgets you can swap for up to six family members. That's actually a feature that the regular iPads still lack. It's designed to stay online even if your Wi-Fi drops. The ecosystem is restricted, though. HomeView lacks the proper app store for streaming or games. You have to have an iCloud+ plan for video recording. This offering is also currently blocked from the EU markets because of the Siri AI restrictions that are still being ironed out. But to me, looking at this, sensors are about 40 bucks. The cameras are about $200. The dead bolts can be up to $350. This is significantly more expensive than, say, using Amazon Alexa or Google Home alternatives or, say, Nest Ring hardware. Are consumers going to want to switch to that? I don't.
Travis Hoium: Lou, what struck me here when you look through the product lineup for basically everything that they announced. The HomeView is just an iPad with a speaker attached to it. Security stuff is products that exist. This seems a little bit like coming out with the iPhone, but doing it in 2015 instead of 2007, where there's already an established market. I have a couple of cameras around the house. We have an internal sensor; there’s no way that I’m either switching from what I have now or spending anywhere near the price point. I seem to come back to that with all these Apple products, despite the fact that I've got a ton of apple stuff in the house.
Lou Whiteman: Well, stop me if you've heard this before, but welcome to the age of incrementalism because that's what we're talking about here. Rachel's right. It's not inspiring. It's no more one more thing where it's just some crazy new thing like that you never knew you needed. Now it's just adding layers or adding functionality to your established ecosystem. You're right, it's overpriced, but it also comes with the Apple brand. I think they'll sell fine. They also have partners. They're not really taking on the risk or the development. I think that this is a no brainer to do, but it's not a revenue mover. I think the most interesting part of this to me is and this may be where we're going here is there was a lot of talk about Siri AI in the house will carry usage limits. If you want to get past those usage limits, you're going to pay them more money.
If there's a path here, I don't think it's in the hardware, it's in the services going up. First of all, you got to get everybody addicted to the products, though. I have a smart home. I have all of this stuff. To be honest, it's all neat, and I don't know if I'd pay a dollar for any of it. I think they have a big hurdle to get to where they want to do, but I think the plan is expand the ecosystem that you've already has established just the incremental revenue there, and look to a future where the home really is smart and you can jack up the price for some of these series, services, and other things.
Travis Hoium: We talked about this a couple of weeks ago, but this is basically the one-decade anniversary of when the home vision came out. The home app. I try to use some of those tools, but they're extremely difficult to use. This almost does seem like the thing that is the manifestation of what that should have been but it's a very apple way of integrating everything together, and I don't doubt that this will all work phenomenally well. But asking people to spend several thousand dollars on devices they may already have and are available for much less money, not to mention, we haven't even talked about the Apple TV. I got three Apple TVs in the house. Probably didn't spend $300 on all of them, much less on one of them. I'm not sure what the real advantages of that product. It seems to me with everything that they're doing, they're almost pricing themselves at this super premium point in the market, which is becoming more challenging because it's not as differentiated as it used to.
Lou Whiteman: That's the great question. I think, arguably, HomeKit failed back a decade ago because they insisted on the walled garden. In a time when everything was just new, and everybody else could communicate with each other, they were the ones who said, No, you have to live inside our ecosystem. I think they would argue they were too early there, not wrong. But as you say, now that everyone has these things, will the walled garden work now? Are you going to replace an existing Ring doorbell for a more expensive Apple one just for the Siri goodness? Because again, I don't know what you think with yours, but I don't know what I want AI to do here. I do think it's an open question, but I do think that it's a question that they feel they can solve over time. We'll see. As you say, it failed before. I don't think it's a guarantee to work this time, but again, I think the stakes are pretty low for Apple, so why not?
Travis Hoium: When we come back, we're going to talk about ASML's earnings. We'll be back in a moment.
Welcome back to the show. ASML reported earnings before the market opened today, and Rachel, things looked pretty good, which I don't think is a huge surprise because they're selling equipment that has multiple years of lead time, and they've got a ton of backlog.
Rachel Warren: Yeah, that's absolutely right. If you're not familiar with the company, ASML, they're Dutch tech giant. They hold the monopoly on the manufacturing of extreme ultraviolet or EUV lithography machines. These are really complex multi ton systems. They print the microscopic circuit patterns onto silicon wafers. Essentially, ASML is the gatekeeper of the semiconductor industry. All the advanced chips Nvidia’s AI processors can't be made without them. Just a little background there. ASML, they pulled in more than 11 billion euros in revenue. Came in well above profit expectations. Gross margins are creeping up towards 60%. CEO has already warned that their planned manufacturing capacity for 2027 and 2028 is already entirely sold out. They're not going to be able to fully meet customer demand. Essentially, you've got the sole provider of the world's most critical chipmaking hardware. They're saying they can't build the machines fast enough to keep up with the market through the end of the decade. I think the cut of biggest takeaway that we're continuing to see outlined here is that that key AI infrastructure build-out, it isn't slowing down anytime soon. If anything, I think there's just a question of there's this artificial ceiling on how much revenue this company can mathematically recognize over the next couple of years. There's constraint from the supply chain. Long run, though, this is great for the industry, and it's certainly great for ASML.
Travis Hoium: Lou, lots of revenue, lots of profits. This is a bottleneck and the stocks up 0.1% as we're recording.
Lou Whiteman: Probably is right. Look, Rachel said it, but maybe this is the toughest company in the world to really look at quarter-to-quarter and learn anything. The high end machines we're talking about, they take 18 months from delivery to order to get installed. You need two huge Jumbo jets to set it up. Look, it's hard to move the needle here. Elevated demand through 2028, all the way to 2030. That's thesis confirming. I don't think that's going to surprise anyone, so that's why I think the stock isn't moving. But look, there were some good notes here. They can't sell the high-end machines to China, but they can sell the low-end more than commoditized machines, and they are seeing a lot of demand and a lot of revenue from China. That's good because that's incremental. That's not really what we were focused on.
Also, they are expanding capacity by 30% over the next few years and they see enough long term demand to invest some of this cash and maybe even go higher for that. I will warn that you have to get your orders in early and most of them are cancelable. I don't know what I think about 20, 30 demand projections, but it's good they see it. Bottom line, ASML is a cyclical stock. There are times to buy. There are times to hold. It's going at 53 times earnings today. You could have bought it for half of that two years ago. This is the time to hold and that's what the stock is doing.
Travis Hoium: It does seem like the question that the market has today with a bunch of the Neoclouds down double digits as we're recording is, sure, there's going to be tons of AI demand in the future, but who's the end customer going to be making revenue from? Who's the Anthropics? The OpenAIs? There's been some reports that they maybe don't have the revenue growth that we were projecting even just a few months ago. Eventually flows its way back to ASML and the semiconductor manufacturing company. Lots to watch over these next few quarters for them. When we come back, we're going to talk about the fall in luxury. We'll do that No. 1.
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Travis Hoium: The luxury retail business has been one of those that seems like it's been on fire for a decade or two at this point, but over the past year or two, we've seen things really reverse. This caught my eye because it's something that seems like it's happening across the industry. Lou, I looked up some of these stocks. [inaudible] currently in 73% drawdown. Hermès down 54%, LVMH, which is arguably the biggest and best of these companies, down about 57%. Is luxury just going out of style at this point? This seems like one of these companies that with more and more rich people, you got to sell bags to somebody.
Lou Whiteman: Cycles happen, and I think that's the big takeaway here. There's three factors that they talk about with luxury right now is hitting on the industry. One, China demand has been going in the wrong direction. Some of that is just geopolitical. Western stuff is out of favor. Some of what's going on with the Chinese economy. We love this. We love the elasticity of pricing, but there's backlash there, too. During the pandemic, a lot of people bought a lot of stuff, and these brands jacked up prices based on demand. Now we're seeing that come back down to Earth, which is hurting the bottom line. The third part of it, related is the aspirational buyer is falling out of the market right now, arguably. We talk about the K shape economy. The upper end of the K can still buy. But as things go more K and the bottom falls, there's a lot of, I don't want to say wannabe. I guess aspirational is nicer. But there are a lot of people that probably shouldn't be buying an overpriced handbag in the first place, who was in a position to do it a few years ago. There's fewer of them are in position to do so now.
Travis Hoium: Rachel, it seems like China is really the big story. That was a tailwind for a very long time for companies, and now it's become a bit of a headwind.
Rachel Warren: That's definitely part of it. LVMH, they reported a 5% organic revenue decline in their core fashion and leather goods division. Obviously, the weaknesses in consumer confidence and spending in China is one key area, macro cooling across the board. We've seen that stock particularly down about 50% from its all-time highs a few years ago. We're seeing different reactions though across the sector. Obviously, LVMH, they're having this Ashland business, there's another key rival Kering. Kering owns Saint Laurent, Gucci, Balenciaga. Their revenue actually plunged by about 16% in their recent readout. Then you've got some of the mid-tier and aspirational brands like Burberry. They're faring even worse. They're seeing major profit slumps, and this is because a lot of their consumers that are more squarely in the middle-class spending area have completely pulled back.
ow, the contrast to that, you look at the very ultra exclusive mega brands like Hermes. They are still broadly immune from what we're seeing. They have the multi-year wait list and also, broadly speaking, a recession-proof clientele. There's a real divergence there. But even going back to LVMH, you look at different parts of their business. For example, their watches and jewellery segment, which is anchored by brands like Tiffany and Co, actually grew 6% organically. If anything, we're also seeing that a lot of these affluent buyers, they're steering clear of some of the more seasonal trends. They're actually parking capital in hard luxury that retains tangible value. I think a lot of the move is to assets, fashion, luxury or otherwise, that can retain and appreciate in value over time.
Travis Hoium: The other thing that I think we can't ignore is the fact that diamonds and fake diamonds have become much more popular and much higher quality that has destroyed the price of that. If you're looking for an engagement ring, it's much cheaper than it was 10 years ago, a little over 10 years ago when I bought mine, little benefit for consumers. But the other thing is, some of these stocks are getting a little bit cheaper. LVMH trading for about 17 times forward earnings. Maybe eventually there will be a value there for investors.
As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have for more recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows The Motley Fool’s editorial standards, and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Lou Whiteman, Rachel Warren, and Dan Boyd behind the glass, I'm Travis Hoium. We'll see you here tomorrow.
