Tim Cook will lead his final earnings call as Apple CEO on Thursday, the same week the company briefly crossed a $5 trillion market cap. Cook steps down Sept. 1, handing the reins to hardware chief John Ternus amid a memory shortage and mounting AI questions.
Apple CEO Tim Cook is preparing to lead his last earnings call as the company's chief executive on Thursday, the same week Apple briefly surpassed a $5 trillion market capitalization and overtook Nvidia as the world's most valuable company.
The milestone comes with Apple's stock up 25% this year, outpacing its megacap peers. Yet the moment is shadowed by a pair of challenges that will likely define the tenure of Cook's successor: a global memory shortage driving up device prices, and a significant lag in artificial intelligence capabilities.
Cook is set to step down on Sept. 1 and transition to the role of executive chairman. John Ternus, a 25-year Apple veteran and the company's head of hardware, will become CEO — only the second person to hold that title since Steve Jobs stepped down in 2011.
Ternus spoke little during the April earnings call, which followed closely after the leadership transition was announced. Investors are expected to press him for more detail on Thursday, when Apple reports fiscal third-quarter results.
The most immediate business pressure is the memory crunch. Last month, Apple raised starting prices on iPads and Macs by at least $100, with some models increasing by more than $1,000. Analysts expect iPhone price hikes to follow. On Tuesday, Apple also announced a partnership with Klarna that will allow U.S. customers to lease an iPhone for up to two years starting at $17.99 per month.
For the quarter ended in June, analysts expect total revenue growth of about 16%, with that figure slipping to 12% in the current period. The price increases, announced just before the quarter closed, will not affect results until the next reporting period.
Counterpoint Research projects total smartphone shipments will fall nearly 14% this year, the steepest decline since 2013, with the lower end of the market — largely Android devices — absorbing the worst of the memory cost pressure. Goldman Sachs analysts, who carry a buy rating on Apple shares, wrote in a note this week that Apple could signal "market share gains given pricing increases at competitors."
Morgan Stanley analysts echoed that view, writing last week that "Apple fundamentals are very strong, with myriad price hikes likely to drive upside to revenue and EPS over the next 6-18 months." The firm recommends buying the stock but cut its Mac forecast for the September quarter by 8%, citing supply challenges.
The longer-term strategic question centers on AI. Rather than investing heavily in large language model infrastructure — the hyperscalers are each spending well over $100 billion in capital expenditures this year, with some expected to exceed $200 billion — Apple has taken a licensing approach, leaning on Google and, previously, OpenAI. Analysts at FactSet expect Apple to spend just over $11 billion in capital expenditures this year, with $3.4 billion coming in the most recent quarter.
Apple sued OpenAI on July 10, alleging trade secret theft. OpenAI denied the claim. Apple's redesigned Siri, released in beta in June, is expected to launch publicly this fall alongside new iPhones.
"Tim Cook, he's a really talented supply chain operations guy, and I think he's done just a remarkable job of navigating the environment," said Melissa Otto, head of Visible Alpha research at S&P Global.
Cook's 15-year run included a fourteen-fold increase in the company's valuation and more than $1 trillion in share buybacks. In its last earnings report, Apple quietly adjusted its long-standing cash management policy, moving away from a goal held since 2018 of being "net cash neutral" toward assessing its cash and debt independently — a shift analysts say could signal more aggressive investment under Ternus.
Whether Apple accelerates its AI spending under new leadership, and how consumers respond to higher device prices heading into the December quarter — historically the company's biggest — will be among the most closely watched questions as the transition formally begins.
Sara Montes de Oca is the Editor in Chief of TechEchelon. Previously a correspondent and producer in Washington, D.C., covering business, finance, and politics.
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