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Data Sheet—When Apple’s Stock Finally Could Hit $1 Trillion

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Tech investors have a new installment of their favorite reality show to watch this week. It’s called “Mega-cap tech-stock earnings reports,” and the programming resumes Tuesday afternoon when Apple reports its results.

Episodes over the last two weeks have been thrilling. Netflix disappointed. Google wowed the audience. Facebook flopped. Amazon crushed it.

What about Apple? Its stock price is up 14% so far this year and needs just another 7% or so bump to get the company to a $1 trillion market cap.

My longest-standing, go-to Apple analyst, Toni Sacconaghi of Bernstein Research, is the polar opposite of a reality-TV script writer. True to form, he has a sober view of what to expect from Apple. Fiscal third quarter results, he tells clients, “are likely to mean little to investors barring a significant surprise to iPhone units, gross margins, or services trajectory.”

What Sacconaghi is saying is that he’d be surprised if Apple issues a surprise. Based on various sources, the company’s results are fairly well baked in. These include sales in China, which accounts for 20% of Apple’s revenues, based on government handset sales data. The analyst doesn’t even expect Apple’s guidance—the guesstimates it provides Wall Street about its coming quarter—to be all that meaningful. This is because Apple watchers expect new iPhones in the fall, but too late to affect the next reporting period.

One comment in Sacconaghi’s report jumped out at me: Apple’s operating margins have declined from 35.3% in its fiscal 2012 to 26.8% in 2017. This is because the company has been investing more aggressively than its sales have been growing. This numerical trend illustrates the qualitative gripe by Apple purists that the company doesn’t innovate the way it used to: Heavy investments haven’t resulted in concomitant magic—or profits.

When Apple and a few others have reported we can begin to generalize about the state of “tech.” It’s the closest thing this industry has to appointment viewing.

Adam Lashinsky
@adamlashinsky
adam_lashinsky@fortune.com

NEWSWORTHY

Booted. New York’s top utility regulator voted on Friday to revoke its approval of Charter Cable‘s 2016 acquisition of Time Warner Cable. Part of a $57 billion merger, the deal gave Charter, under it Spectrum brand name, 2 million cable TV and Internet customers in the state. But the New York State Public Service Commission says Charter hasn’t lived up to promises of bringing broadband to tens of thousands more residents living outside of cities. The company, which will certainly appeal, was given 60 days to offer a plan to divest the acquired customers.

Temporarily booted. The seemingly too good to be true MoviePass service crashed to earth a bit last week. After parent company Helios and Matheson Analytics ran out of cash on hand, customers were unable to use the service on Thursday. Service was restored after the company got a $6 million loan that’s due next week.

Included. In a continued effort to find growth markets, IBM announced a blockchain product for the finance industry dubbed LedgerConnect. The idea is to use a private database shared among banks based on the software used for tracking digital currency transactions like bitcoin.

Joining the fray. The IPO market got another hit of tech on Friday when Opera, maker of the same-named web browser, went public at $12 a share. The shares rose modestly 9% by the end of the day.

Joining the fray, a different way. An in-depth profile and interview from Bloomberg explores the background of the new top crypto regulator at the Securities and Exchange Commission, Valerie Szczepanik. “What we’re hoping is people will want to come into compliance,” she says. “If there’s no effort to do that, if instead folks choose to ignore applicable laws, we might take a different tack.”

We can monitor it for you wholesale. Mobile chip designer ARM Holdings is buying data analytics firm Treasure Data for about $600 million. Now owned by SoftBank, ARM has been seeking to get into the market for smart, connected devices, or the Internet of Things. Treasure Data’s service has been used, for example, by Mitsubishi to analyze billions of readings from sensors on wind turbines to schedule preventive maintenance.

The real McCoy. Law enforcement agencies like the FBI complain loudly about their inability to crack encryption security on smartphones, but a new study found a much larger challenge was tracking down suspects’ unencrypted data from cloud service providers. “This is an issue that has received relatively little attention and resources, and certainly not enough compared to the need,” the study by the Center for Strategic and International Studies noted.

FOOD FOR THOUGHT

With the (fairly) recent explosion of artificial intelligence and machine learning programs has come an explosion of media coverage of the subject, not all of it accurate. Oscar Schwartz talks with one of the leading media critics of AI coverage, Zachary Lipton, an assistant professor at Carnegie Mellon University, in The Guardian. Lipton says many journalists are focused on the wrong story:

“Making real progress in AI requires a public discourse that is sober and informed,” Lipton says. “Right now, the discourse is so completely unhinged it’s impossible to tell what’s important and what’s not.”

Lipton is not the first person to express concern about the new AI hype cycle and where it is taking the field. Last year, the pioneering roboticist Rodney Brooks wrote an article criticizing the “hysteria about the future of artificial intelligence” for MIT Technology Review. In 2013, New York University professor Gary Marcus wrote an article for the New Yorker in which he argued that the hype will create unrealistic expectations followed by disillusionment leading to another AI winter.

But for Lipton, the problem with the current hysteria is not so much the risk of another winter, but more how it promotes stories that distract from pressing issues in the field. “People are afraid about the wrong things,” he says. “There are policymakers earnestly having meetings to discuss the rights of robots when they should be talking about discrimination in algorithmic decision making. But this issue is terrestrial and sober, so not many people take an interest.”

IN CASE YOU MISSED IT

The U.K.’s ‘Fake News’ Report Suggests Fining Tech Companies for Misinformation By Alice Tozer

NBA LIVE 19 by EA Sports Finally Adds Custom Female Players By Hallie Detrick

Amazon Is Giving You Collaborative Wish Lists By Don Reisinger

Google Is Adding Free Wi-Fi Hotspots In Nigeria As Part of Push in Africa By Jonathan Vanian

A Newly-Disclosed TSA Surveillance Program Monitors Air Passengers Even If They Have No Known Terrorist Ties By David Meyer

Facebook Joins YouTube in Suspending Infowars’ Alex Jones for Hate Speech By Chris Morris

BEFORE YOU GO

From the Department of Things Don’t Always Go As Planned, that insane torture-fest/global sporting spectacle known as the Tour de France came to end on Sunday with the first ever Welshman wearing the yellow jersey. Geraint Thomas was expected to support the efforts of his team leader and past champion, Chris Froome, but ended up having the stronger legs.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.