Apple (AAPL) has remained one of the safest long-term bets for years. The company has built an empire around the iPhone, expanded into wearables and services, and generated consistent earnings and cash flows. Despite its massive scale and an extremely loyal customer base, the company is entering a critical phase. The next few years might not be just about new iPhones. Artificial intelligence (AI) has changed the game for tech companies, and now it is about who can raise the stakes to get ahead in this race. In my previous article I discussed how Apple is falling behind in AI compared to its tech rivals.
So far this year, AAPL stock has climbed 14.61%, closing in on the tech-heavy Nasdaq Composite Index ($NASX) gain of 14.33%. The one decision that could make or break Apple stock over the next few years now depends on the new CEO John Ternus.
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Let’s take a closer look at what that decision might be.
www.barchart.com Apple Still Operates From a Position of Strength
For over a decade, Apple’s business model has focused on perfecting hardware and creating an ecosystem that keeps users locked in. The iPhone became the centerpiece of that strategy, while products like the Apple Watch, AirPods, Mac, and iPad strengthened customer loyalty. At the same time, Apple quietly built a services empire through App Store revenue, subscriptions, cloud services, payments, and entertainment. That recurring revenue stream kept its earnings consistent, which boosted investors’ confidence in the company.
Under Tim Cook’s tenure as CEO, Apple became dramatically more profitable, expanded globally, and evolved into a financial powerhouse. Apple’s financial machine still remains extraordinarily strong. In the March quarter, Apple reported a 17% year-over-year (YOY) increase in revenue to $111.2 billion, with a 22% increase in earnings per share to $2.10. Additionally, services revenue hit an all-time high of $31 billion in the first quarter of fiscal 2026. Despite supply constraints, Apple generated $57 billion in iPhone revenue during the quarter, up 22% YOY.
The company held $147 billion in cash and marketable securities, continued buying back $11 billion in shares, and just authorized another $100 billion repurchase program while raising its dividend by 4%. Recently, Apple announced that longtime executive John Ternus will take over as CEO, starting September. During the Q1 earnings call, Ternus hinted that Apple may be entering a more aggressive innovation phase. Encouragingly, Apple is entering this transition from a position of strength.
Apple’s Future Depends on the new CEO
The tech industry has shifted dramatically in this AI era, and Apple’s Magnificent Seven rivals are aggressively pushing into generative AI, cloud infrastructure, and autonomous systems. Meta Platforms (META) is aggressively integrating AI across its entire ecosystem, while Amazon (AMZN) is taking a more infrastructure-focused AI approach by embedding AI into AWS cloud services and investing heavily in AI chips and data centers. Similarly, Microsoft (MSFT) has positioned itself at the center of the generative AI boom through its deep partnership with OpenAI, while Alphabet (GOOG) (GOOGL) is pushing aggressively into AI through Gemini models, AI-powered search, and cloud computing. Meanwhile, Apple has appeared to be playing defense rather than offense.
Now, investors are looking beyond just earnings and a new iPhone launch. Apple needs to prove if it can create another category-defining product, if Siri can become truly competitive in generative AI and can it evolve beyond the iPhone without weakening its ecosystem. Perhaps the most important question now is if John Ternus can lead Apple through the AI era as successfully as Tim Cook led it through the smartphone era.
The AI Race Is Now Apple’s Biggest Test
Apple’s future may no longer depend solely on how many phones it sells each year or the negligible upgrades the iPhone shows with every launch. In fact, over the next ten years, John Ternus faces a very different challenge. Instead of just protecting the existing business, the new CEO must convince investors that Apple can still lead technological change. He must show investors that he can turn Apple into the defining AI hardware ecosystem of the next generation. Wall Street now wants proof that Apple can move beyond incremental AI improvements and build products capable of reshaping consumer behavior again.
Overall, analysts rate AAPL stock a consensus “Moderate Buy.” Of the 42 analysts covering the stock, 23 offer a “Strong Buy” rating, three have a “Moderate Buy,” 15 offer a “Hold” rating, and one gives a “Strong Sell.” Currently, Apple stock is hovering just above its average target price. But the Street-high estimate of $400 implies that shares can rally as much as 28.75% over the next 12 months.
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www.barchart.com On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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