Apple is about to announce its latest earnings report, which will also be Cook’s final earnings call as CEO. Over the past 15 years, Apple’s market capitalization has grown approximately 14-fold, but with a leadership transition, the company now faces new challenges including AI investment, product innovation, and cost pressures.
Apple (AAPL.O) is set to hold its final earnings call hosted by CEO Tim Cook. At this pivotal moment, Apple’s market capitalization has surpassed $5 trillion and briefly exceeded NVIDIA to become the world’s most valuable company.
Since 2026, Apple's stock has risen approximately 25%, becoming one of the best-performing stocks among the "Magnificent Seven." The market once viewed Apple as a "safe haven" in the artificial intelligence investment boom, but the stock's rise has not eliminated the company's long-term challenges. The company is set to report earnings after U.S. markets close on Thursday.
On September 1, Cook will step down as CEO and assume the role of Executive Chairman, with John Ternus, Apple’s head of hardware, succeeding him. This will be Apple’s second CEO since Steve Jobs stepped down in 2011.
Since taking over as Apple’s CEO in 2011, Cook has continued to expand the iPhone business and launched products and services such as Apple TV+, Apple Music, Apple Pay, Apple Watch, and AirPods, helping transform Apple from a hardware-focused company into an ecosystem spanning devices, software, and services.
During Cook's 15-year tenure, Apple's market capitalization increased by approximately 14 times, maintaining high profitability through supply chain and cash flow management. The company repurchased over $1 trillion in stock during his leadership.
However, the Cook era has also left some unresolved issues. Apple has yet to launch its next major hardware platform following the iPhone, and the high-priced mixed-reality device Vision Pro, released in 2024, has not yet achieved widespread market adoption.
Rising memory costs are driving up device prices, putting pressure on iPhone profits.
Currently, Apple's most direct pressure comes from the global shortage of memory supply.
As the construction of AI infrastructure drives rapid growth in demand for memory chips, global chip production competition has intensified, leading to higher component costs for Apple. Last month, citing a global memory shortage, the company raised the starting prices of its iPad and Mac models, with prices for some models increasing by over $1,000.
Prices on some devices increased by up to 20%. Since the adjustment occurred at the end of the quarter, its impact will be gradually reflected in future quarters.
The market expects Apple to raise prices when it releases the next-generation iPhone this fall. Although the iPhone has not yet officially increased in price, analysts generally believe that rising memory costs may force the company to reassess its pricing strategy.
Goldman Sachs analysts believe that competitors are facing greater cost pressures, potentially creating opportunities for Apple to gain market share. Morgan Stanley also believes that Apple’s strong brand power may enable the company to drive revenue and profit growth through price increases.
However, price increases carry demand risks. Brandon Nispel, an analyst at KeyBanc Capital Markets, noted that if Apple raises the price of the iPhone, device sales growth could slow, and a decline in user growth could further impact the development of its services business.
Jefferies analyst Edison Lee believes that although Apple can partially offset rising memory costs by increasing prices, profit margins may still come under pressure. He expects that if memory prices continue to rise, the overall gross margin for the iPhone could decline from 38% to 34.5%.
To mitigate the impact of price increases on consumer purchasing intent, Apple recently launched the Apple Upgrade program, allowing U.S. users to lease products such as the iPhone, Apple Watch, and iPad through monthly payments.
Bank of America analysts believe the plan could lower the barrier to purchase for consumers, accelerate device upgrade cycles, and strengthen Apple's direct connection with users.
The AI strategy has become an issue that the new CEO must address.
Compared to short-term cost pressures, Apple’s greater long-term challenge comes from artificial intelligence.
Tech companies such as Microsoft, Google, and Meta Platforms are making massive investments in AI infrastructure, with some firms expected to exceed $200 billion in capital expenditures this year. According to FactSet data, Apple’s AI-related spending this year is projected to be just slightly above $11 billion.
Unlike its competitors, Apple has not heavily invested in building its own AI infrastructure, instead relying more on external partnerships, including the use of Google’s AI technologies and cloud computing resources.
Previously, Apple collaborated with OpenAI to integrate ChatGPT into Siri and certain operating system features. However, their relationship has recently deteriorated; on July 10, Apple sued OpenAI, accusing it of stealing trade secrets, a claim OpenAI denies.
Currently, the market is most focused on whether Apple’s new Siri will be successfully launched. The feature entered testing in June and is expected to be released this fall alongside the new iPhone.
However, investors believe that launching an upgraded Siri alone is not enough to demonstrate Apple’s leading AI capabilities. The company needs to consistently introduce more AI features to prove that AI can generate new user value and business growth.
Dave Sekera, Chief U.S. Market Strategist at Morningstar, said the market still does not know what "killer AI application" Apple will develop to generate significant economic value from its users. He believes that while Apple’s lack of investment in large-scale AI infrastructure may benefit it in the long term through capital efficiency, it still needs to demonstrate a clearer AI strategy in the short term.
With Tenus assuming the role of CEO, Apple may reassess its AI investment strategy. Last year, the company revised its cash management policy, moving away from its longstanding “net cash neutral” goal established in 2018, which aimed to keep cash levels roughly equal to debt—potentially creating room for increased AI investment in the future.
Apple's Chief Financial Officer, Kevan Parekh, previously stated that the company would "prioritize investing in business growth" before returning excess cash to shareholders.
The earnings report highlights four key issues, with Wall Street showing clear divergence in its outlook for future performance.
Apple's third-quarter financial results will be announced this week. The market expects the company's revenue to be approximately $108.8 billion and earnings per share to be around $1.89, surpassing last year's同期 revenue of $94 billion and EPS of $1.57.
Among these, the iPhone business is expected to generate $53.5 billion in revenue, representing approximately 20% year-over-year growth; the services business is projected to reach $31.3 billion, up 14% year-over-year; and revenue from the China market is expected to grow 27% to $19.5 billion.
On this earnings call, investors focused on four key issues: the pricing strategy for the next-generation iPhone, the impact of rising memory costs on profit margins, the effectiveness of the Apple Upgrade program, and Apple’s future AI investment direction.
Wall Street institutions currently have differing views on Apple's prospects.
Bank of America has given Apple a "Buy" rating, suggesting that the Apple Upgrade program could enhance the consumer purchasing experience and accelerate device upgrade cycles. Goldman Sachs expects iPhone and Mac sales to support Apple's revenue growth, while also viewing the services business as a key driver of profit growth over the next five years.
Jefferies believes that rising memory costs will continue to pressure Apple’s margins, creating downward pressure on its stock price over the next 12 months. Morningstar, on the other hand, argues that Apple’s biggest challenge is not a lack of AI investment, but rather its failure to demonstrate that AI can generate sufficient commercial value.
With the Cook era coming to an end, Apple’s next phase of development will become a focal point for the market. Tunus must answer not only how to sustain growth in existing businesses, but also how to position Apple to find new growth drivers in the age of artificial intelligence.