Talk about big shoes to fill. Next week, John Ternus will officially take the reins at Apple from longtime CEO Tim Cook, one of the most successful corporate leaders of all time. Investors have been rewarded handsomely over the course of his 15-year tenure, with shares rising around 2,205%, compared to the S & P 500 's 560% gain. Cook, who will become executive chairman, oversaw Apple's transition from a cool consumer tech company into one of the most valuable companies in the world. It's hard to imagine a harder act to follow than Cook, but he had to succeed Steve Jobs, who returned to Apple in the late 1990s and brought the company back from the brink. The crowning achievement in a long list of achievements for Jobs, the late Apple co-founder, was the introduction of the iPhone, which is still the company's cash cow to this day. AAPL mountain 2011-08-24 Apple shares during Tim Cook's 15 years as CEO Cook took over as CEO of Apple on Aug. 24, 2011, after Jobs officially stepped down. Jobs died six weeks later from pancreatic cancer at the age of 56. At the time of the leadership transition, Apple's market capitalization was $349 billion, trailing ExxonMobil by roughly $9 billion. Apple has since skyrocketed to more than $5 trillion, making it the second company to ever top that threshold. Exxon's market cap is currently $665 billion. Cook achieved this incredible value creation by innovating and protecting the iPhone business, building a services juggernaut, and putting wearables like the Apple Watch and AirPods on the map. He set the bar for how to buy back stock and how to run supply chains under both Republican and Democratic presidents — not to mention a global pandemic. Cook put custom Apple chips across the company's devices, and has avoided the exorbitant spending that comes with the heated artificial intelligence arms race. "[Cook] is just a great spokesperson for so much that's good. And any of us who have ever had a tiff with him were on the wrong side," Jim Cramer said. "He's just a very special person, a remarkable person." " Part of his semi-retirement has to do with leaving Apple in a very good state," D.A. Davidson's Gil Luria said. "The company, the stock, they're in terrific shape." Still, the outgoing CEO, now 65, hasn't escaped unscathed as the memory chip shortage that led to soaring prices forced him to raise device prices. While leaning on Alphabet 's Google to jump-start its AI features, Apple must figure out its long-term AI game plan. Ternus, the company's hardware chief, is going to have to figure out how to keep all those balls in the air while convincing Wall Street he has a plan to take Apple to even greater heights than his predecessors. On paper, he looks tailor-made for this moment. The 51-year-old Ternus has spent more than half his life working on Apple's hardware, ranging from the development of AirPods and the Apple Watch, as well as several generations of the MacBook and the iPhone . Here are the three biggest questions facing Ternus when he becomes CEO on Sept. 1. How are Apple's products positioned for the AI era? While Big Tech companies have aggressively expanded their AI footprint, the iPhone maker has struggled to find its footing. Ternus must rise to the occasion and face the ultimate battlefield that the industry has to offer, especially after delays to the long-awaited revamp of Siri and a mass exodus of top AI talent. Or at the very least, he must catch up. By contrast, Meta Platforms has strengthened its core advertising business and boosted user engagement across Facebook and Instagram platforms by leveraging AI models. Alphabet's Search business has been a big beneficiary of AI as well. During July earnings, CEO Sundar Pichai said that Search usage hit a record high during the World Cup this year. He added that AI makes Search "more helpful and intuitive." "This really highlights how much people turn to Google in moments that matter," Pichai said on the conference call. "AI continues to drive an expansionary moment with new experiences resonating with users and driving growth in queries." Some Wall Street analysts say that Apple's initial rocky start to AI means that Ternus needs to act fast. "He needs to infuse the organization with more AI throughout, which would imply more investment," said Laura Martin, a senior analyst at Needham. "Both Google and Amazon will spend $200 billion or more in capex this year, and Apple will spend $20 billion in capex." Meta's capex guide for 2026 is not far behind, coming in at $145 billion at the high end of the range. Martin sees the lack of AI spend as a negative for Apple. "It's a bigger company, actually, so it's too big a disparity." If Apple increases AI spending, it may dent the stock in the near term. However, the Needham analyst, like Jim, also recognizes the positives of not jumping on the AI buildout train with both feet. Martin said that Apple has become "the centralized location for investors that think that AI is overhyped." "From a stock point of view, probably the best thing that John can do is buy back shares with free cash flow. That would not be, in my opinion, the right visionary thing to do," Martin added. That would be right out of the Cook playbook. "John is going to have to decide whether he wants to try to ignore arguably the biggest tech disruption since the internet and return capital to shareholders," she said. Apple's measured approach to AI has certainly followed the Jobs ethos of not leading or creating new markets but disrupting existing ones with exquisite products. Apple did not create the smartphone. But the iPhone came to dominate the market by doing the unthinkable at the time: getting rid of a physical keyboard. The iPhone's success also took the iPod's music store to the next level with apps and then sticky services. Will Ternus pivot? Instead of simply rolling out newer and better AI-infused iPhones, will Apple consider how it can innovate past its flagship device and biggest money maker? Maybe Apple will take an approach like Meta on the hardware side. CEO Mark Zuckerberg has said smart glasses are one of the best ways to do it. "Glasses are basically going to be the ideal form factor for AI," he said during a recent earnings call. Zuckerberg argued that AI needs to see and hear what users experience to become a true personal assistant. While Meta Ray-Bans and Oakleys have been popular, the business is small relative to its core ad business. Plus, the company's Meta Quest virtual and augmented reality headsets are not exactly hitting it out of the park. Apple's answer to VR headsets, the Vision Pro, has been a flop. Will Ternus want to take on Meta in smart glasses? Apple, however, is not starting from scratch on AI. While 2024 and 2025 were ultimately a bust, the company has gotten its AI act together in 2026. Apple announced a multiyear deal to integrate Google's Gemini models into Siri and the broader Apple Intelligence platform, giving Apple access to language models while avoiding the eye-watering capital expenditures facing its rivals. Apple does still pay Alphabet for its tech, just exponentially less than other tech giants spend on AI. We saw the news as a win for both Apple and Alphabet. And remember, Google pays Apple exorbitant amounts for search priority. What's the plan for Apple's supply chain? Cook's legacy has been defined by his deft leadership through tumultuous supply chain environments and tense international trade relations. During his tenure, Cook saved the company from serious trade disruptions. He announced a $400 million domestic manufacturing investment after President Donald Trump threatened to raise import levies on iPhones made overseas. That was enough to prevent the administration from slapping Apple with higher tariffs, bypassing a massive increase in production costs. To cushion Apple against intensifying tensions between the U.S. and China, Cook has also pushed to diversify manufacturing into India, Vietnam and other regions, including America. Now, incoming CEO Ternus inherits a severe memory supply problem that Cook himself described as a "100-year flood." Surging costs for these components forced Apple to raise retail prices across its Mac and iPad lineups this summer to preserve gross margins. During his final earnings call as CEO, Cook acknowledged the pricing pressures and said that the spike in memory costs left the company with few alternatives. No changes have been made to iPhone pricing yet. We expect to hear about that when the new devices are unveiled at the company's annual September showcase. The kinds of memory that Apple needs for its devices are dynamic random-access memory (DRAM), which is essentially a computer's short-term working memory, and NAND flash memory, a type of non-volatile storage, for all the programs and apps, as well as other files, including videos, photos, and documents. While DRAM is faster than NAND, the latter retains information even when power is turned off. The biggest producers of DRAM and NAND are Club name Micron , based in Boise, Idaho, as well as South Korea's Samsung and SK Hynix . Samsung and Japanese memory maker Kioxia are listed as Apple suppliers, according to FactSet. Apple is also looking elsewhere, most notably and controversially in China. According to media reports last month, Apple has started testing chips from state-backed ChangXin Memory Technologies for devices sold within China. The company has reportedly lobbied Washington to permit broader use of CXMT's products. Micron opposes the move and has asked Washington to prohibit it — pointing to Micron's massive investments in U.S. manufacturing. Commerce Secretary Howard Lutnick said the Trump administration does not want Apple to turn to the Chinese. He said that message has been delivered to Apple. Media reports over the weekend, however, indicated that the Trump administration may let Apple source memory from Chinese suppliers for devices sold in China. This comes ahead of Chinese President Xi Jinping 's planned U.S. visit, expected in late September. Nothing has been confirmed, but speculation still slammed memory stocks on Monday, with Micron down nearly 6%. Shares recovered some on Tuesday, up more than 2%. Apple stock "needs to have Chinese memory," Jim said during Tuesday's Morning Meeting. "If you get Chinese memory, then the stock takes up to the high." Since coming off the boil over the past month, Apple shares are down roughly 9.5% since their July 28 record-high close of $340 each. The stock is still up 14% year to date. AAPL YTD mountain Apple YTD More good news for Apple? Cook is staying on as executive chairman, and Ternus has been riding shotgun through the memory crisis. Cook's expertise and track record will help the company navigate these headwinds. Corporate governance experts also view Cook's new role as a way to calm investor concerns about the leadership change. "They are looking to signal there's continuity, that there's a continued strategic continuum that's being followed, and that there's a bit of a failsafe," said Jane Edison Stevenson, global vice chair of executive search firm Korn Ferry. But an extended executive transition could present its own problems, Stevenson said. "The danger is if that is, in many cases, an undefined period of time, it can make it more challenging for the new leader to take hold with the freedom to make independent decisions," she added. What's next for services? Apple's services business is a big area of focus as Ternus takes over, especially after the unit missed revenue estimates last quarter. Services, which includes the App Store, Apple Music, iCloud and Apple Pay, has become essential to Apple under Cook's watch. The unit saw a record-breaking June quarter and generated $30.7 billion in revenue, up 12% year over year. Revenue did, however, come in under analysts' expectations of $31.22 billion. Still, with an installed base exceeding 2.5 billion, services do provide recurring, high-margin income that cushions Apple during broader economic downturns that could weigh on device sales. Under Ternus, investors are watching closely to see whether generative AI can supercharge services. Rather than monetizing AI strictly through hardware upgrades, Apple could leverage buzzy new features as drivers for higher-tier subscription bundles like Apple One. There could be new revenue streams from offerings like expanded cloud storage tiers and developer commission cuts from AI app subscriptions. This is still largely speculative, though, as Cook said that Apple didn't have a "complete plan" for charging users, but aims to use AI as a selling point for iCloud subscriptions. While hardware sales face lengthening upgrade cycles and volatile component pricing, services revenue remains remarkably sticky. Every active iPhone, iPad, or Mac sold generates continuous cash flow regardless of whether the owner upgrades their physical device that year. This dynamic lies at the heart of Apple's unique business model: hardware serves as the initial hook, while subscriptions maximize the lifetime value of every customer. By deepening the user's lock-in to Apple's ecosystem, it can drive up average revenue per user. Like the continuity of Cook staying at Apple when Ternus takes over as CEO, Eddy Cue will remain as head of services. Stressing the need for Apple to continue growing its services business, Cue is on record as saying at one of Google's antitrust trials that AI is a transformative technology. "You may not need an iPhone 10 years from now, as crazy as it sounds," he said. Bottom line Despite all that Apple has going for it, the stock might get slapped with downgrades and a selloff when Ternus takes over. "I think that's wrong," Jim said last week. Apple's fundamentals are incredible, so we say stay the course. "We aren't trading it, but my fondness for Tim Cook is so great that it will be difficult for me to be as confident with a new CEO," he added during the August Monthly Meeting. Jim added that he's not going to pre-judge Ternus. 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From CNBC Tech
By CNBC Tech
August 25, 2026
