Apple Inc. reports quarterly earnings after the close on Thursday, but investors will be largely looking past the numbers and seeking clues to incoming chief executive John Ternus’ strategic plans. The iPhone maker announced last week that Ternus, its current head of hardware infrastructure, will take over for Tim Cook on Sept. 1. That makes Apple’s fiscal second-quarter earnings report, outlook and conference call the first significant opportunity for Wall Street to get a reading on the new leader’s priorities. It isn’t clear if Ternus will appear on the call, and a company spokesperson declined to comment. “It isn’t really about the numbers,” said Anthony Saglimbene, chief market strategist at Ameriprise. “We want to know what the CEO transition looks like.” Ternus is taking over at a complex time for one of the world’s biggest companies, which is expected to debut a number of major products in upcoming months — notably a foldable iPhone. But while growth trends are improving, Apple has been grappling with skyrocketing costs for key components like memory chips and a volatile macro backdrop driven by the war in Iran and advances in AI that have minted stock market winners and losers. “Investors have reason to be excited about Ternus since he was an overseer of some of Apple’s most successful recent products, but his strategy will be a long-term story,” said David Wagner, portfolio manager at Aptus Capital Advisors, which has about US$14 billion in assets and holds Apple in a variety of portfolios. “In the short term, the impact of component costs will be the focal point.” Apple shares are up less than one per cent this year after a relatively disappointing 8.6 per cent gain in 2025. By contrast, the technology-heavy Nasdaq 100 Index is up 8.3 per cent in 2026 and the S&P 500 Index has gained 4.9 per cent. Apple’s stock was up 1.2 per cent on Thursday afternoon. While the company is accelerating development of AI-powered hardware devices and features, it has also seen a number of delays with its own artificial intelligence products. However, Apple hasn’t followed its megacap peers in sinking tens of billions of dollars into building out AI infrastructure, which has diminished the stock’s correlation to the rest of the tech industry. Earnings from the four biggest spenders — Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp. — after the bell on Wednesday offered a mixed bag on that theme. For example, Meta shares were punished in extended trading after the Facebook parent raised its expectations for capital expenditures in 2026. Meanwhile Alphabet’s stock jumped as its cloud computing unit reported strong growth, signalling that its AI investments are starting to pay off. Wall Street expects Apple to report 19 per cent earnings growth on a 15 per cent jump in revenue, according to data compiled by Bloomberg. For the fiscal year, which closes at the end of September, analysts anticipate that revenue will climb 12 per cent, nearly twice last year’s 6.4 per cent pace and the fastest rate since 2021. However, that still trails the tech sector, which is expected to post revenue growth of more than 26 per cent in 2026, according to Bloomberg Intelligence data. The relatively slow expansion has made Apple’s stock more expensive. The shares trade at nearly 30 times estimated earnings, a sizable premium to their 10-year average of roughly 23. That gives Apple the second-highest valuation among the Magnificent Seven group of tech giants , trailing only Tesla Inc. and its nosebleed multiple of more than 180 times forward earnings. “Apple is a quality name, which warrants a premium, but it continues to look pretty expensive relative to its growth,” said Matt Stucky, chief portfolio manager of equities at Northwestern Mutual Wealth Management Company, which manages around US$5 billion. This setup could put more pressure on Ternus to chart a path to stronger long-term growth, according to Stucky. “If innovation from the new CEO can provide that, then there’s reason to be optimistic about Apple from here, and that optimism could keep the multiple strong or even push it higher,” he said. “Right now, we don’t know what that growth catalyst could be. If the strategy is more about grinding out market-share gains, keeping products refreshed, that would be good but not game-changing.” The soaring cost of memory chips is one of the biggest factors in the company’s outlook. Memory is a major part of the buildout of artificial intelligence infrastructure, and the aggressive spending on AI has created a supply crunch. An index of spot prices for dynamic random-access memory, or DRAM, chips has risen more than 500 per cent since the end of August. Apple’s next CEO John Ternus faces defining AI momentApple CEO Tim Cook’s 15-year legacy by the numbers That said, Apple is better positioned to absorb higher costs than many of its rivals due to its size and balance-sheet strength. For example, it recently rolled out a less expensive version of the MacBook designed to improve the company’s market share in lower-end laptops. However, the longer memory prices stay elevated the more the impact is expected to spread, potentially hitting Apple’s bottom line. “The stocks that have been hit the hardest are the ones that show some kind of margin degradation,” Aptus Capital’s Wagner said. “So if the memory headwind sticks around, it will start to become a margin risk for Apple. And given the valuation, there’s more room to the downside.” —With assistance from Subrat Patnaik, Neil Campling and David Watkins. Bloomberg.com
Apple earnings become sideshow with new CEO ready to grab reins
