Tim Cook last earnings call puts Apple handover, prices and AI in focus

Tim Cook last earnings call as Apple’s chief executive comes after the iPhone maker briefly crossed a $5 trillion market value, overtook Nvidia as the world’s most valuable company and saw its shares rise 25% this year. The fiscal third-quarter report, due Thursday, will test investor confidence in Apple’s pricing power, supply chain and artificial intelligence plans before Cook hands the CEO role to John Ternus on Sept. 1.

Cook will become executive chairman after 15 years running Apple. During his tenure, Apple’s valuation increased fourteen-fold, according to CNBC, though the company has not produced a hardware platform on the scale of the iPhone and has struggled to build a large market for the Vision Pro headset released in 2024.

Ternus, Apple’s head of hardware and a 25-year company veteran, will become Apple’s next chief executive. He spoke little on the company’s April earnings call, which followed the announcement of the leadership change, leaving investors looking for more detail on how he will address the company’s near-term and strategic pressures.

What will investors ask on Tim Cook’s last earnings call?

The most immediate issue is component supply. Apple cited a global memory shortage last month when it raised starting prices on iPads and Macs by at least $100, with some models increasing by more than $1,000. CNBC reported that some devices saw price increases of up to 20%.

Those increases were announced near the end of the June quarter, so their effect is expected to show up later. Analysts expect Apple’s total revenue to rise about 16% for the June quarter and about 12% in the current period, according to CNBC. Investors are likely to focus on whether higher prices affect demand in the December quarter, Apple’s largest seasonal sales period.

Apple has also introduced a U.S. iPhone leasing program with Klarna, the buy now, pay later provider. The plan allows customers to lease an iPhone for as long as two years, with prices starting at $17.99 a month, Apple announced Tuesday.

Counterpoint Research expects global smartphone shipments to fall nearly 14% this year, which it said would be the steepest annual decline since 2013. The research firm said lower-priced devices face particular pressure because manufacturers have less room to absorb higher memory costs, a risk that falls more heavily on Android handset makers.

Goldman Sachs analysts wrote this week that Apple could point to market-share gains as competitors raise prices. Morgan Stanley analysts said last week that they viewed Apple’s fundamentals as strong and that price increases could lift revenue and earnings per share over the next six to 18 months, while cutting their September-quarter Mac forecast by 8% because of supply constraints. Both firms have buy ratings on the stock, according to CNBC.

How does Apple’s AI strategy differ from rivals?

Apple has relied more on partners than on building large-scale AI infrastructure itself. The company is licensing much of its AI technology from Google and using Google’s cloud, while analysts expect Apple’s capital expenditure to be just above $11 billion this year, including $3.4 billion in the latest quarter, according to FactSet. By contrast, large cloud providers are spending more than $100 billion each this year, with some expected to exceed $200 billion, CNBC reported.

Apple previously worked with OpenAI, whose ChatGPT was integrated into Siri and other operating-system features. That relationship has deteriorated, and Apple sued OpenAI on July 10, alleging theft of trade secrets. OpenAI denied the allegation.

The redesigned Siri, released in beta in June and expected to launch publicly this fall alongside new iPhones, remains central to Apple’s consumer AI push. Investors are also watching whether Ternus changes Apple’s capital allocation as AI demands rise.

Under Cook, Apple repurchased more than $1 trillion of stock. In its April report, the company adjusted language around its cash policy, moving away from its 2018 goal of becoming “net cash neutral,” meaning cash equal to debt, and saying it would assess cash and debt separately. “We invest in the business first and foremost and then look to kind of return excess cash to shareholders,” Chief Financial Officer Kevan Parekh said on the April call.

This story draws on original reporting from CNBC.