Ternus Takes the Reins Amid Apple's Margin Squeeze

Apple's new CEO John Ternus is inheriting a company facing significant challenges. Despite posting a record quarter, Apple's shares have declined by around 12% since their peak in July.

The latest setback came when the company issued guidance of 9-11% revenue growth for the current quarter, falling short of Wall Street's estimate of 12%. Analysts are now revising their targets downward due to concerns over supply-chain friction and memory-chip inflation, a phenomenon that is both fuelled by and detrimental to Apple's business.

The impact of AI-driven price increases on Apple's procurement costs cannot be overstated. The company is essentially paying for the boom it helped ignite without reaping the corresponding revenue benefits. This irony only adds to the pressure on Ternus as he takes the reins from Tim Cook.

Underlying these challenges are fundamental issues with Apple's margin structure and its limited investment in AI infrastructure, a stark contrast to competitors like Microsoft, Meta, and Amazon.