The Cook era has ended; what will Ternus bring to Apple?

Tim Cook, who has been at the helm of Apple for 15 years, will officially step down as CEO on September 1. His successor is John Ternus, a veteran who has worked in hardware engineering at Apple for over 25 years. This is only the second CEO change at Apple in 30 years, and the most significant management transition since Steve Jobs handed over to Cook.

This transfer of power has been carefully planned and is proceeding smoothly.

Cook will remain until after WWDC (June 8) before officially departing, ensuring that Apple’s most critical AI strategy unveiling is still led by him. Ternus will preside over the iPhone launch event in September, making his debut in the most natural way—on the very stage most familiar to this former head of hardware engineering.

Morgan Stanley’s assessment is clear and direct: This is truly a succession, not a disruptive change. Whether it’s the vertically integrated approach in hardware, services, software, and chips, the annual stock buybacks of $80 billion to $100 billion, single-digit annual dividend growth, or the "build over buy" philosophy in small acquisitions, none of these will undergo fundamental changes in the short term. Yet with a new CEO, investors now have renewed space to reimagine Apple’s long-term narrative.

History may repeat itself—Morgan Stanley data shows that in the 12 months following the last CEO transition, Apple’s share price outperformed the S&P 500 by as much as 57.1%.

A Deep-Tech Hardware Veteran

John Ternus, now 50 years old, joined Apple in 1998—three years after Cook—but has deeply embedded himself in Apple’s product DNA in a different way.

Over the past 25 years, he has led hardware engineering for the iPhone, Mac, iPad, Apple Watch, and AirPods, witnessing and driving the historic transformation to Apple Silicon Macs and the expansion into wearable categories. His stage appearances at Apple product launches have become an important highlight in recent Apple product cycles.

Meanwhile, chip architect Johny Srouji (currently 62 years old) has been promoted to Chief Hardware Officer, with responsibilities extending from hardware technology to the entire hardware engineering system.

It’s worth noting that Srouji joined Apple in 2008 and led the development of Apple’s first self-developed chip, the A4 processor. Since then, he has built a comprehensive in-house tech stack covering processors, modems, cameras, displays, and batteries. The partnership of Ternus and Srouji is a double bet for Apple on the deep integration of hardware and chips.

Cook’s Legacy Will Be Fully Inherited

Morgan Stanley identified the five biggest concerns among investors, and the answers were highly consistent: almost no change in the short term.

In capital allocation, the expected path is clear—annual dividend growth remains at single digits, annual buybacks stay between $80 billion and $100 billion, 10 to 20 small tech acquisitions per year, with a long-term target of net cash neutrality.

Current CFO Kevan Parekh (52 years old) has likewise grown within the systems of Cook and former CFO Luca Maestri, ensuring continuity.

In AI capital expenditure, since Cook will still lead the WWDC on June 8, Apple’s current AI strategy framework won’t be changing in the short term.

Morgan Stanley forecasts Apple’s capital expenditure will reach $20 billion in FY28, mainly driven by the deployment of in-house chips in Apple’s private cloud computing. No major surge in capital spending is expected after Ternus takes office.

Execution is the Biggest Unknown

Morgan Stanley admits the primary risk lies in execution. Ternus has never served as CEO of a listed company, let alone one of the world’s top three tech giants by market value. His communication style in the public market, risk tolerance, and decision-making logic in the face of macro volatility all remain a “black box” for the market.

"Are you more like Jobs, or more like Cook? How much risk are you willing to take?" These will be the core questions analysts and investors repeatedly ask over the coming quarters.

Additionally, over the past 18 months, Apple has undergone a deep round of management shakeups—long-term CEO, CFO, COO, AI leader, and general counsel have all departed or are about to leave. Although successors are drawn from Apple’s deep internal talent pool, the period for the new team to coordinate and adapt is itself an unavoidable transitional friction cost.

Apple’s Stock Outperformed the Market by 57% in 12 Months After Jobs Handed Off to Cook

Morgan Stanley cites historical data: on the day Jobs announced his resignation in 2011, Apple’s share price relative to the S&P 500 had an excess return of just -0.6%. Over the following 1, 3, and 6 months, excess returns were 11.0%, -0.8%, and 17.9%, respectively. After 12 months, excess return reached 57.1%—the sustained strength of fundamentals was the real driver behind the share price rally.

Currently, Apple’s fundamentals remain equally solid.

Morgan Stanley provides three scenario-based valuation targets: bull-case target price of $414 (corresponding to FY27 bull-case EPS of $10.60 and a P/E of 39.1, with $22 per share potential upside from robotics business), base-case target price of $315 (corresponding to FY27 EPS of $9.76 and P/E of about 32), and bear-case target price of $194 (corresponding to FY27 bear-case EPS of $7.89 and a P/E of 24.6).

Uncertainty Breeds New Narratives, Fundamentals Provide a Cushion

In summary, Apple under Cook was a company driven by supply chain management, scale operations, and ecosystem monetization as its core flywheel. Under Ternus, Apple will build on this foundation with stronger product and hardware DNA, and strategic vision for a new round of technological integration in the AI era.

For investors, a CEO transition is not a risk itself, but a window to reassess Apple’s long-term pricing. Morgan Stanley’s logic is clear: fundamentals will not suddenly deteriorate, but the narrative variables introduced by the new CEO may serve as catalysts for a revaluation. Historically, excess returns for Apple stock quietly accumulated during periods of transitional uncertainty.

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