After 15 years at the helm, Tim Cook is stepping down as Apple CEO in September, handing the reins to John Ternus, the company's current senior vice president of hardware engineering. Cook transformed Apple from a $350 billion company into a $4 trillion tech giant, but experts say he's leaving behind a critical challenge: defining Apple's AI strategy while maintaining its cultural relevance with younger consumers.

"Apple needs more of an App Store moment than an iPhone moment," said our analyst Yory Wurmser on a recent episode of "Behind the Numbers." "They need to figure out a way to turn Apple Intelligence and Siri into a platform that integrates all these other AI services into a seamless product."

Ternus inherits a company at a crossroads

Cook's tenure delivered extraordinary financial results, annual sales grew from $100 billion to $400 billion, and the services business alone now generates $100 billion annually. He also turned Apple into one of the biggest ad companies in the US, expected to make nearly $9 billion from ads this year, according to our March 2026 forecast.

"There are all of those factors, but I think there's just a bigger thing that he didn't screw up," Wurmser said. "So many times a visionary leader leaves a company and a company stagnates or backtracks."

Cook successfully launched new product categories including Apple Watch and AirPods, though neither redefined markets the way the iPhone did. The Apple Watch now outsells all Swiss watchmakers combined, while AirPods became what our analyst Jacob Bourne called "arguably Apple's most culturally sticky product of the Cook era."

The AI dilemma

Apple's cautious approach to AI has kept it out of the $3 trillion data center spending spree that competitors are pursuing, but it's also created uncertainty about the company's long-term competitive position.

The company plans to use Google's Gemini to power Siri improvements later this year, betting that AI models will become commoditized over time. GenAI apps paid Apple nearly $900 million in App Store fees last year, according to AppMagic, providing revenue without massive infrastructure investment.

"Most of its revenue comes from consumer hardware, it hasn't felt the kind of urgency that Google and Microsoft felt to act aggressively on AI," Bourne said. "Apple correctly read the tea leaves in terms of sensing that consumer sentiment on AI wouldn't be altogether positive."

The risk is longer-term. Bourne noted that Apple's lack of urgency "is translating into a lack of investment that's going to come back to haunt it down the road on the consumer product front."

Talent driving innovations in electronics engineering and material science are flocking to companies developing frontier AI models, potentially eroding Apple's innovative capabilities.

Hardware remains the priority

Ternus brings 25 years of Apple experience and a track record overseeing development of AirPods, iPhone, and Apple Watch. His hardware expertise signals Apple's continued focus on consumer devices, with a foldable iPhone, smart home hub, and smart glasses reportedly in development.

"To really not become boring, you have to continually hit that novelty edge a bit," Bourne said. "Apple does need an iPhone moment."

The challenge extends beyond creating new products. Apple must maintain what Bourne called its "good guy status among big tech," the perception that it prioritizes consumer interests through privacy protections, device longevity, and user-friendly design.

The memory chip shortage driven by AI data center demand presents an additional hurdle for consumer electronics development, though Apple's scale may insulate it better than smaller competitors.

"The highest priority right now is to figure out AI, figure out how to, first of all, get Siri working like a real AI assistant, and then integrating the whole operating system around that," said Wurmser.

Listen to the full episode.

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