Laura Martin, Needham senior internet and media analyst, joins 'The Exchange' to discuss Apple ahead of Apple's earnings report after the bell. She says it can't work without an iPhone replacement cycle.

New York

A Needham analyst recently downgraded Apple’s stock from buy to hold, citing concerns about the company’s ability to keep pace with competitors in artificial intelligence (AI) investment. The analyst noted that Google’s Android platform is rapidly integrating generative AI tools, which could threaten Apple’s ecosystem if iPhone users begin switching to Android devices in the future.

The analyst emphasized that Apple’s stock performance is closely tied to the iPhone replacement cycle, and currently, there are no compelling features prompting users to upgrade their devices. Without a significant iPhone refresh or breakthrough features, the risk increases that users with aging iPhones may consider switching to Android if it offers more innovative capabilities.

Needham: Apple's stock can't work without an iPhone replacement cycle

To Apple, this one's been trading for a while. My next guest downgraded the stock in early July from a buy to a hold. She says the level of AI CapEx required to catch up to the competition makes her cautious into the print. Let's bring in Needham's Laura Martin. Laura, welcome. Does Apple really have to spend on AI or can they just ride on the investments of others since they're kind of the gateway to the premium consumer? You know, I don't think they can. They have this wonderful installed base that's very loyal right now. But the problem is their only competitor in real life is Android. And that happens to be owned by Alphabet Google. And Google is telling us that they are putting generative AI tools and features into every one of their products, including Android. So if Android rushes ahead of Apple, you will get people replacing their Apple iPhones two years from now, three years from now, four years from now with an Android. And then that starts to destroy the entire Apple ecosystem equation because all of the other hardware products are upsells from the iPhone and services is completely dependent upon the iPhone. So there's real existential risk here if Apple doesn't have a response to the Google Android threat. Well, that's the part of this that I'm skeptical of and that I think investors really need to think about. I don't have an answer one way or the other, but it doesn't seem to me that there are yet operating system level features that are AI driven, that are differentiating anybody, Android from the iPhone. So far, we've got apps mostly right on top of it, nothing that consumers are really attaching to. So should investors wait until there really is that clear danger that Google Android is gaining market share on Apple or should the assumption be that they're going to? So I agree with you. Like you would have to arrest my iPhone out of my cold dead hand right now. So no, Android needs to show a product that is a killer app that gets me to trade in my iPhone for Android. So you absolutely should wait. The important point for Apple is I think the stock can't work unless you get an iPhone replacement cycle and nothing they're doing, forget generative AI, with anything makes me wanna go out and replace my iPhone. So my iPhone is getting older and older and older and that makes the threat more real that if Android does something cool, I've got this really old iPhone two years from now, I'm much more willing to swap out of the iPhone ecosystem. So I just think the Apple stock can't work without an iPhone replacement cycle.

Trump administration special envoy Steve Witkoff will visit Gaza with U.S. Ambassador to Israel Mike Huckabee to assess claims of starvation in the enclave at the center of Israel's war against Hamas.

Jerusalem

Middle East Conflict

U.S. officials to visit Gaza amid starvation, genocide accusations

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Ljubljana

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Kyiv

Ukraine Invasion

Ukraine parliament reverses bill on anti-corruption agencies amid crisis

U.S. President Donald Trump has signed an executive order increasing tariffs on Canadian goods that don't meet the terms of the Canada-U.S.-Mexico Agreement to 35 per cent.

Ottawa

Global Tariffs

Trump raises Canada tariff to 35%, grants extension to Mexico

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President Donald Trump says the U.S. will charge a 15% tariff on imports from South Korea as part of a deal that eases, for now, tension with a top-10 trading partner and key Asian ally.

Washington

Trump says U.S. will set 15% tariff on South Korean imports

U.S. President Donald Trump slapped a 50% tariff on most Brazilian goods to fight what he has called a "witch hunt" against former President Jair Bolsonaro, but softened the blow by excluding sectors such as aircraft, energy and orange juice from heavier levies.

Rio de Janeiro

Trump hits Brazil with tariffs, sanctions but key sectors excluded

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Okinawa

Tsunami damage less severe than feared after Russian earthquake

Prime Minister Mark Carney announced that Canada will recognize a Palestinian state later this year if the Palestinian Authority, which governs parts of the West Bank, meets certain conditions.

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Australia said on Wednesday (July 30) it will add YouTube to sites covered by its world-first ban on social media for teenagers, reversing an earlier decision to exempt the Alphabet-owned video-sharing site and potentially setting up a legal challenge.

Canberra

Australia expands teen social media ban to YouTube

President Donald Trump said on Wednesday (July 30) the United States will impose a 25% tariff on goods imported from India, as well as an unspecified penalty for buying Russian weapons and oil, on Aug. 1.

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Mourners flooded the streets of Birmingham to celebrate the life of rock-and-roll legend Ozzy Osbourne during his funeral procession in the United Kingdom. Mark Savage, a music reporter at the BBC, a CBS News partner, joins with more details.

Birmingham

Ozzy Osbourne fans flood Birmingham streets to mourn late music icon

U.S. President Donald Trump told reporters before departing from Scotland that Jeffrey Epstein poached workers from his Mar-a-Lago spa. Trump mentioned Virginia Giuffre, one of Epstein's most vocal accusers, in his latest remarks.

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Owdeh Hathaleen, a 31-year‑old Palestinian activist, teacher, and filmmaker behind the Oscar-winning documentary No Other Land, was shot dead by an Israeli settler near the village of Umm al‑Khair in the South Hebron Hills.

Palestinian activist killed by Israeli settler in West Bank

A powerful magnitude 8.8 earthquake off Russia's Far Eastern Kamchatka Peninsula triggered tsunami waves of up to 16 feet nearby, and sparked evacuation orders in Japan, Hawaii and across the Pacific on Wednesday (July 30).

Hawaii

Tsunami reaches Hawaii after huge quake shakes Russia's Far East

The U.N. General Assembly brought high-level officials together to promote a two-state solution to the decades-old Israel-Palestinian conflict. Israel and the United States are boycotting the two-day meeting, co-chaired by the foreign ministers of France and Saudi Arabia

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Police say the man who shot and killed four people in a New York City office building before he took his own life had a "documented mental health history." Mayor Eric Adams says he may have been targeting the National Football League (NFL).

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Jeffrey Epstein-associate Ghislaine Maxwell is offering to testify before Congress in exchange for concessions like full immunity. CBS News Department of Justice reporter Jake Rosen has more.

Ghislaine Maxwell offers to testify before Congress

Prime Minister Keir Starmer said on Tuesday (July 29) Britain was prepared to recognize a Palestinian state in September at the United Nations General Assembly unless Israel takes a number of steps to improve life for Palestinians.

London

UK to recognize Palestinian state unless Israel takes action

Russia launched overnight air strikes on over 70 Ukrainian cities, killing more than 20 people, according to President Zelenskyy. A pregnant woman died near a hospital in the southeast, while a prison strike killed at least 17.

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For the first time, human rights groups inside Israel are accusing their own government of committing genocide in Gaza. Israel insists it is targeting Hamas, not civilians—despite nearly 60,000 Palestinian deaths since the war began almost two years ago.

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Former Colombian President Álvaro Uribe was found guilty of bribery and witness tampering in an unprecedented trial that has shaken the country.

Bogotá

Ex-Colombian president Uribe convicted of witness tampering, bribery

Russian Security Council Deputy Chairman Dmitry Medvedev posted on social media that President Trump's deadline push for a ceasefire with Ukraine is "a threat and a step towards war."

Moscow

Russian official calls Trump's ceasefire deadline 'a threat'

Ukraine says Russia's overnight air strikes hit a prison in Zaporizhzhia in the southeast, killing at least 17 people. Another 35 were injured. Authorities say the attacks destroyed the jail buildings and damaged several nearby houses.

Zaporizhzhia

Russian air strikes hit a prison in Ukraine's Zaporizhzhia, 17 killed

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A gunman killed at least one police officer and shot a handful of other people Monday in the heart of New York City. CBS News New York has the latest details.

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