Tim Cook last earnings call arrives as Apple stock hits record

Tim Cook’s last earnings call as Apple CEO comes with the stock at a record and the company facing a crowded list of investor questions. CNBC reported that Apple briefly topped a $5 trillion market value on Tuesday and passed Nvidia as the world’s most valuable company, but the next CEO will inherit pressure on pricing, supply and artificial intelligence.

Cook is set to step down on Sept. 1 and become executive chairman, according to CNBC. John Ternus, Apple’s hardware chief and a 25-year company veteran, is slated to take over. Ternus will be only Apple’s second CEO since Steve Jobs left the role in 2011.

Apple shares are up 25% this year, CNBC reported, outpacing its megacap peers. Cook’s 15-year tenure also saw Apple’s valuation rise fourteenfold, even as the company did not introduce a new hardware platform as large as the iPhone and struggled to build a broad market for the high-priced Vision Pro headset released in 2024.

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

The biggest near-term issue is cost. CNBC reported that Apple raised starting prices for iPads and Macs by at least $100 last month because of a global memory shortage, with some models rising by more than $1,000. Some device prices increased by as much as 20%, though those changes came late enough that their effect will show up more in the current quarter than in the June quarter.

Analysts expect Apple to report about 16% revenue growth for the quarter ended in June, CNBC said, with growth slowing to 12% in the current period. The question for investors is whether higher prices hurt demand during the December quarter, Apple’s biggest sales period of the year.

Apple has not raised iPhone prices or changed iPhone forecasts after its June warning, according to CNBC. The company also announced a U.S. iPhone leasing program with Klarna this week, letting customers lease an iPhone for up to two years starting at $17.99 a month.

The broader phone market looks weak. Counterpoint Research expects global smartphone shipments to fall nearly 14% this year, the steepest decline since 2013, according to CNBC. Goldman Sachs analysts wrote this week that Apple could point to market-share gains as rivals raise prices, and Morgan Stanley analysts said price increases could support revenue and earnings per share over the next 6 to 18 months. Morgan Stanley also cut its September-quarter Mac forecast by 8% because of supply challenges.

Why is Apple’s AI strategy under scrutiny?

Artificial intelligence is the longer-term concern. Apple has been licensing much of its AI technology from Google and using Google’s cloud, CNBC reported, rather than spending at the scale of the biggest cloud companies. FactSet estimates cited by CNBC show analysts expect Apple to spend just over $11 billion in capital expenditures this year, including $3.4 billion in the latest quarter, while major cloud providers are each spending well above $100 billion and some could exceed $200 billion.

Capital expenditures are money a company spends on long-term assets such as data centers, servers and chips. For AI, that spending matters because advanced models often require large computing capacity to train and run.

Apple’s prior AI relationship with OpenAI has nearly broken down, according to CNBC. Apple sued OpenAI on July 10, alleging trade-secret theft, and OpenAI denied the claim.

Apple released a redesigned Siri in beta in June, and CNBC reported that it is expected to launch publicly this fall alongside new iPhones. Investors will be watching whether Ternus signals a faster AI investment plan after Apple recently adjusted its cash policy. CFO Kevan Parekh said on Apple’s April call that the company invests in the business first, then considers returning excess cash to shareholders.

This story draws on original reporting from CNBC.