Apple’s new CEO Ternus to face first earnings test

San Francisco, Apple's incoming CEO John Ternus prepares to deliver his inaugural earnings call on Monday, with investors eager to assess the impact of the company's recent product launches on its financial performance. Ternus succeeded Tim Cook in September and has been instrumental in introducing several new offerings, including Apple's inaugural foldable phone, a smart home hub, and touch-screen laptops.

These products have been shipping since the company's most recent fiscal quarter, amidst a noted surge in memory chip costs.

During the earnings call, analysts will scrutinize three key areas: Apple's holiday-quarter outlook, Ternus' perspective on AI and the revamped Siri, and the growing memory-chip costs that are expected to compress quarterly profit growth to its weakest level in six quarters. Apple has been attempting to differentiate its AI offerings from competitors like Meta Platforms and OpenAI, which are gaining traction with their respective AI-driven products.

Apple's AI strategy is geared toward everyday users rather than the tech-savvy Silicon Valley crowd that has been using frontier AI models from OpenAI.

Tech analyst Dan Morgan notes that investors are interested in understanding whether Apple can monetize third-party AI agents sold through its App Store, a move that could generate revenue. Despite Apple's cautious approach to the AI spending race, its shares have climbed by approximately 27% this year, surpassing other tech giants such as Microsoft, Alphabet, Meta, and Amazon.

Analysts anticipate Apple to report an 11% increase in revenue to $113.39 billion for the July-September period, with net profit expected to rise by 6% to $29.04 billion.

The services segment is projected to expand by nearly 10% to $31.56 billion, marking its slowest growth in over three years. iPhone sales are forecasted to increase by about 15% to $56.54 billion, a slowdown from the 22% growth observed in the preceding three months. The results will reflect sales of the recently launched iPhone 18 Pro models, which accounted for just nine days of sales.

Additionally, the debut of the foldable iPhone Duo on October 23 is expected to boost holiday quarter sales, although some users have reported display issues leading to Apple's offer of replacements. Online orders for the Duo have been selling out rapidly. IDC analyst Nabila Popal predicts sustained demand despite supply constraints, with estimated delivery times of 79 days, extending into January.