Apple CEO Tim Cook and incoming CEO John Ternus attend the annual Allen & Company Sun Valley Media & Technology Conference at Sun Valley Resort in Sun Valley, Idaho, July 9, 2026.
Brendan McDiarmid | Reuters
Tim Cook’s final financial report is apple The CEO takes over the same week the iPhone maker surpasses $5 trillion in market capitalization. Nvidia As the world’s most valuable company. But there’s no time to celebrate.
Even though the stock has been trading at record prices this year, up 25%, outpacing its mega-cap peers, Apple has been forced to raise prices on its devices in light of memory shortages and a rush for chip manufacturing capacity. Meanwhile, Apple has yet to release its redesigned Siri to the public, the most obvious example of how far behind the company is in artificial intelligence.
Mr. Cook is set to step down on September 1 and assume the role of chairman, leaving the new challenge to John Ternus, who has worked at Apple for 25 years and is head of the company’s hardware division. Tarnas said little at the company’s last earnings call in April, shortly after the CEO change was announced.
Investors may have more questions for Tarnus after the company releases its third-quarter results on Thursday. He will be the company’s second CEO since Steve Jobs stepped down just months before his death in 2011. Mr. Cook’s 15-year run at the top was highlighted by a 14-fold increase in the company’s valuation, even as the company failed to launch a major hardware platform after the iPhone and struggled to find a large market for its expensive 2024 virtual reality headset, the Vision Pro.
“Tim Cook is a really talented supply chain operations person and I think he’s done a great job navigating the environment,” Melissa Otto, head of visible alpha research at S&P Global, said in an interview. “At least we’ll have some visibility and comment on the current environment and how they’re navigating it.”
Last month, Apple raised the initial prices of iPads and Macs by at least $100, and some models by more than $1,000, citing a global memory shortage. Analysts expect iPhone prices to rise this year. Meanwhile, Apple on Tuesday announced a program with Klarna, which offers buy-now-pay-later financing, to allow customers in the U.S. to lease iPhones for up to two years starting at $17.99 per month.
Price increases of up to 20% for some devices were announced just before the end of the quarter, so the impact won’t be reflected until this quarter. Analysts expect total revenue to rise about 16% in the quarter ended June, but that growth will slow to 12% this quarter.
More important to investors is how higher prices will affect demand in Apple’s December quarter, its biggest quarter of the year.
“The fundamentals are very strong.”
Total smartphone shipments fell nearly 14% this year, the largest drop since 2013, according to Counterpoint Research. The riskiest part of the market is at the low end, where manufacturers have less room to pass on rising memory costs. This mainly means Android smartphones.
Analysts at Goldman Sachs, who rate Apple’s stock a “buy,” wrote in a note this week that Apple could signal “market share gains as competitors raise prices.”
Apple hasn’t raised iPhone prices or changed its iPhone forecasts after the June warning, but some analysts have changed their models. Some analysts say the price hike could actually boost revenue because of the company’s famous brand.
“We continue to believe that Apple’s fundamentals are very strong, and myriad price increases will likely lead to higher sales and EPS over the next six to 18 months,” Morgan Stanley analysts said in a note last week. The company recommends buying the stock but lowered Mac’s forecast for the September quarter by 8%, citing supply issues.
The Apple Siri interface on an iPhone is placed in San Francisco, California, USA on Wednesday, February 11, 2026.
Jason Henry | Bloomberg | Getty Images
While running out of memory is the biggest challenge facing Apple in the short term, the more significant risk to the company’s business in the long term is likely related to its AI strategy.
Instead of spending millions on AI infrastructure to build or deliver advanced models, Apple licenses much of its AI technology from: google The same goes for using the cloud. Hyperscalers have spent well over $100 billion in capital spending this year, with some spending more than $200 billion, according to FactSet, but analysts expect Apple’s investment to be just over $11 billion, rising to $3.4 billion in the latest quarter.
“Apple was initially hurt by many investors by not participating in the LLM investment cycle, but investors are coming back for Apple’s industry-leading free cash flow,” Baird analysts wrote this month. They recommend buying stocks.
Before Google, Apple’s primary AI partner was OpenAI, whose ChatGPT was integrated into Siri and other parts of the operating system. The partnership nearly collapsed, and Apple sued OpenAI on July 10, alleging trade secret theft. OpenAI denied this claim.
Apple needs a redesigned Siri, released in beta in June and expected to launch with new iPhones this fall, to garner public interest. They must then follow that release by adding more AI capabilities to keep up with the fast-paced industry.
Taking over Ternus may set the company up for more aggressive AI investments. Under Cook, the company wasted a lot of cash and repurchased more than $1 trillion in stock during his tenure.
In its last earnings report, Apple made some changes to its stated policy on handling cash. Rather than sticking to its goal of being “net cash neutral” or having cash on hand equal total debt, which it has been advocating since 2018, Apple said it could independently value cash and debt, thereby freeing up funds for AI.
“We’re looking to invest first and foremost in the business and then return any excess cash to shareholders,” Apple CFO Kevan Parekh said on a conference call in April.
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