Apple's New CEO Takes Office, And His Resolve Not To Heavily Invest In AI Will Be Put To The Test!
On September 1, Apple will complete a rare top-level management transition. Former Senior Vice President of Hardware Engineering Tenus will officially assume the role of CEO, succeeding Tim Cook, who led Apple for 15 years. Cook will become Executive Chairman of Apple's board. Apple announced this arrangement on April 20. When Ternus took over, the company's market value was about $4.6 trillion, and its stock price remained near historic highs. Compared to continuing the growth of the Cook era, the market is more focused on whether Apple can find its place in the AI race. Tenus's first major public task after taking office is to host the fall product launch event on September 9 local time. Analysts expect Apple to launch the iPhone 18 series, which may include the first foldable iPhone. This product may be named iPhone Ultra and will compete with Samsung, as well as Huawei, OPPO, and Xiaomi foldable phones. Apple may also release new AirPods and Apple Watch.
When Tim Cook succeeded Steve Jobs in 2011, Apple's market value was about $350 billion; now it is close to $4.6 trillion. Meanwhile, the company's business has further expanded from the iPhone to Apple Watch, AirPods, services, and self-developed chips. But the core problem Tenus faces has changed. Apple still holds an advantage in consumer electronics, but is lagging behind some tech peers in the generative AI wave. Apple has been slow to add AI capabilities and has not built large-scale data centers and computing infrastructure like Amazon, Google, and Microsoft. Whether Apple ultimately succeeds depends on whether it can differentiate itself in AI and deliver technology to consumers in an intuitive, credible, and habitual way.
Apple's restraint in AI infrastructure also leaves Turnus with a special advantage: greater capital allocation space. Apple's fixed assets are about $51 billion, ranking only 40th among S&P 500 constituents, with growth of 28% over the past four years. During the same period, Microsoft grew about 285%, Meta Platforms about 200%, and Alphabet about 180%. This gap is related to the business model during the Cook era. Apple has long focused on devices, operating systems, services, and supply chains, rather than training cutting-edge AI models from scratch, nor has it fully bet on large-scale cloud computing infrastructure. This makes Apple more dependent on external AI partners, but investors still recognize this capital discipline. According to LSEG data, Apple's expected price-to-earnings ratio is about 33 times, higher than the overall level of the "Big Seven" after excluding Tesla.
Apple's truly hard-to-replicate assets are not just on paper. Its global supply chain spans over 60 countries and thousands of facilities, and another more important asset is its user base of over 2.5 billion active devices. For generative AI, models ultimately need to enter users' daily lives through phones, headphones, watches, and computers, and Apple already controls a vast number of device entry points. By combining Apple Silicon, on-device computing, privacy protection, operating systems, personal contextual information, and a vast device installation base, Turnus may further consolidate Apple's dominance in the AI era of devices.
Market Insight:
Apple's free cash flow is expected to reach $156 billion by 2027, and it has yet to lock in a large amount of cash flow in computing infrastructure for the next few years, allowing it to adjust its investment pace according to changes in the AI market. Apple is reportedly developing AI smart glasses, AirPods with cameras, an iPhone with a full glass body, and desktop robots. Other rumored products include smart rings and more smart home devices.
