Apple’s New CEO Has 8 Days to Answer the AI Question That Could Redefine Computing

John Ternus took over as Apple's CEO on a day when the stock reached a record high, with roughly eight days remaining before a crucial hardware event. In the face of mounting challenges, Ternus must address the AI question that could reshape computing. Apple's stock rose by 2.61% on his first day, trading at $325.13, up 40.58% over the past year and 19.92% year-to-date.

The company reported fiscal Q3 revenue of $109.42 billion, up 16.4% year-over-year, with EPS of $2.02, beating consensus expectations. Gross margin reached 50.1%, partially boosted by $2 percentage points of tariff refunds. However, memory costs are squeezing hardware margins, and Apple's services revenue of $30.74 billion at a 75.6% gross margin may help mitigate the impact.

Microsoft leads in AI with over 30 million Copilot seats, while Alphabet's Gemini boasts 950 million monthly users. Meta is also investing heavily in AI, with 3.6 billion users on its Family DAP. Apple spends $11.73 billion on R&D each quarter and faces stiff competition from Microsoft, which plans $175 billion in capital expenditures for FY27.

Analysts project Apple's next devices, including a potential foldable iPhone, could address the AI challenge. However, the probability of such a device before 2027 is estimated at 94.9% by Polymarket, while a broader new product line market sits at 30.5%. Despite these challenges, Apple's services model and its installed base of over 2.5 billion devices give it a competitive edge.

Ternus must prove that the iPhone remains the center of Apple's AI strategy while navigating the evolving landscape of AI-driven computing.