Key Morningstar metrics for Apple

  • Fair Value Estimate: $260
  • Morningstar Rating ★★★
  • Morningstar Moat Rating: Wide
  • Morningstar Uncertainty Rating: Medium

Apple AAPL named John Ternus its next CEO, effective Sept. 1. Tim Cook will transition to the role of executive chairman, and former board chair Arthur Levinson will assume the role of lead independent director. Ternus was formerly the senior vice president of hardware engineering.

Why it matters: We expect continuity in Apple’s strategy under Ternus. We like that the new CEO will have a background in products and engineering, and expect a continued firmwide focus on the user experience, security and privacy, and deeper integration with Apple-designed silicon.

  • Ternus, 50 years old, had been rumored to be the internal successor for several months, with Cook turning 65 in 2025 after 15 years in charge. Ternus has been credited with hardware design on the Mac and iPad, working in hardware and products for 25 years at Apple.
  • Apple’s artificial intelligence strategy will be Ternus’ first focus. We believe Apple is ready to release improved AI software under its partnership with Google Gemini this year, and we expect Ternus to focus on the integration of distilled Google models with Apple’s own software and hardware ecosystem.

The bottom line: We maintain our $260 fair value estimate for wide-moat Apple and see shares as fairly valued. Ternus was our expected successor to Cook, and we expect continuity in a transition. Shares were effectively flat after hours on the news.

Coming up: Apple reports March-quarter earnings after the market closes on Thursday, April 30. We expect strong year-over-year growth to be led by the iPhone, and another record quarter for gross margin, in spite of rising memory prices. We expect to hear more from Ternus and Cook on the earnings call.

  • Apple’s worldwide developer conference, WWDC, is set for June 8 through June 12. There, we expect the announcement of revamped AI features under Apple Intelligence, and for Ternus to participate meaningfully in the keynote, which we expect to be on June 8.