When Apple’s legendary founder Steve Jobs handed over the reins to Tim Cook in 2011, the move sparked widespread market concerns about the company’s future. As it turned out, Cook delivered an outstanding performance in growing the business and creating shareholder value, with Apple stock returning more than 2,600% to investors during his tenure. Now, Cook has just held his final earnings call as CEO, and with John Ternus set to take over, can Apple sustain its remarkable run?
iPhone Sales Surge, Cook Ends on a High Note
For the fiscal third quarter ended June 27, Apple posted revenue of $109.4 billion, up 16% year-over-year. iPhone sales were the biggest highlight, generating $54 billion in revenue, a 22% increase year-over-year. Gross margin expanded from 46.5% to 50.1%, while earnings per share rose 29% to $1.98.
Cook emphasized the potential of the new Siri voice assistant during the analyst conference call. The product was unveiled at the Worldwide Developers Conference in June and remains in testing, with an official release expected in the coming months. He also revealed that Apple is actively exploring the technical feasibility of running micro-large language models on personal iPhones.
Services Show Softness, New Guidance Raises Concerns
Despite the strong quarterly performance, the market was disappointed by Apple’s fourth-quarter revenue guidance. The company expects revenue growth of 9% to 11% for the fiscal fourth quarter, below analyst expectations of 12%. Management attributed the pressure to foreign exchange headwinds and supply constraints, while emphasizing that “demand remains very strong.”
More concerning to investors was the slowdown in services revenue. Services revenue grew 12% year-over-year this quarter, a notable deceleration from the 16% growth in the previous quarter. Management cited similar foreign exchange headwinds along with some softness in app sales. As services represent a key high-margin component of Apple’s business, any slowdown in its growth could affect market perceptions of overall earnings quality.
Cost Pressures Emerge, Pricing Strategy Adjusts
Apple recently announced it would raise prices on some products due to surging memory chip costs. This move reflects the continued transmission of global inflationary pressures to hardware manufacturers and signals the company’s efforts to protect margins through its pricing power.
Ternus Takes Over: Steady Growth Remains the Theme
Although the stock fell in after-hours trading, Apple’s cumulative return under Cook exceeded 2,600%, with the company’s market capitalization briefly surpassing $5 trillion. At the current price of $303, the stock trades at a P/E ratio of roughly 35, still at an elevated level, reflecting market confidence in Apple’s long-term value.
The challenge for incoming CEO Ternus is to sustain this growth momentum. Analysts generally agree that Apple’s ecosystem moat remains strong and iPhone demand stays resilient. However, in the AI race, Apple’s strategy of partnering with Google rather than making massive independent investments — while reducing capital expenditure risk — has raised questions about whether the company can maintain its hardware-software integration advantage in the AI era.
Over the medium to long term, Apple remains a stock suited for long-term holding. The high-growth era under Cook is now history, and Ternus will take on more of a steward’s role going forward. For investors, Apple’s recent pullback offers an opportunity, but expectations for its future should shift from “rapid growth” to “steady progress.”
