Apple's New Era Under Ternus: A Shift from Cloud to Device-Centric AI

As Apple's new CEO John Ternus takes over on September 1, analysts at Bank of America (BofA) are cautioning that his biggest challenge will be restoring a sense of technological surprise to the company. With nearly $4.5 trillion in market capitalization accumulated under outgoing CEO Tim Cook over almost 15 years, Apple's growth has become incremental and less innovative.

BofA points out that much of Apple's core business is expected to remain unchanged under Ternus, with strong capital returns, potential leadership in AI at the edge, and optionality from new products and markets driving its Buy rating. However, the bank also sees an opportunity for Apple to shift away from its cloud-services model and towards a more device-centric approach, where devices themselves carry AI functionality and drive productivity.

BofA flags potential areas of expansion in wearables such as glasses, rings, and AirPods with cameras, smart home automation, and virtual and physical personal assistants. Additionally, the bank notes that Apple's departure from a net cash neutral objective may signal increased spending on research and development, capital expenditure, and mergers and acquisitions.