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Apple (AAPL) reported Q2 revenue of $111.184 billion with 16.6% year-over-year growth across all geographic segments, 8 consecutive earnings per share and Services hitting a record $30.976 billion, although the stock is trading at a P/E of 37 with only an analyst consensus target of $315 offering minimal upside.
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Tim Cook’s departure eliminates the executive who managed Apple’s geopolitical supply chains, relations with China and built the Services annuity, leaving successor John Ternus maintaining complex operations while executing an underdeveloped AI strategy with a growth stock valuation.
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The largest company in the world is changing drivers. after marking the beginning Apple (NASDAQ:AAPL) from approximately $400 billion to $4.535 trillion in market value, Tim Cook will step down and his successor is hardware chief John Ternus. The impact of the transition came in the May 18 announcement window, when r/wallstreetbets saw its biggest spike in Apple activity of the year. Does the world’s most valuable company survive a transfer without serious rerating?
This is a net negative risk for shareholders and the market could be undervaluing it.
What Cook Really Delivered
If the legacy is reduced to numbers, it will be uncomfortable for any successor. Apple shares have risen more than 2,100% since Cook took over as president in August 2011, with a return of 55% in a year before the announcement. In the second quarter, Apple reported $111.184 billion in revenue, a 16.6% year-over-year increase, with double-digit growth across all geographic segments and an eighth consecutive earnings per share. Services reached a record of 30,976 million dollars. Cook also blessed his exit with a $100 billion buyback authorization and a 4% dividend increase to $0.27. His own words at the exit, from the second quarter statement. “Today, Apple is proud to report its best March quarter ever, with revenue of $111.2 billion and double-digit growth across all geographic segments.”
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Cook was also a builder. He rebuilt China’s supply chain, negotiated directly with the Trump administration over tariffs (Jim Cramer noted in 2019 that until Cook sat down with the president, the White House party line had been that if Apple wants to do so much business in China, it can face the consequences), and turned the services into a recurring revenue annuity.
The bullish arguments for change and why they fall short
Apple’s AI history is scant. At Apple’s most recent developer conference there was “a lot less AI, a lot less intelligence from Apple than in the previous version.” A CEO of a construction company could solve that. Retail is already buzzing, with a “Thanks Tim Apple” thread hitting a sentiment score of 90 (very bullish).