Apple’s Next Act

A new CEO at Apple is never just a leadership story, it’s an investing story. We talk through what it could mean now that Tim Cook is retired and Apple hands the reins to John Ternus, a longtime product development leader. If you’ve felt the iPhone cycle has turned into small upgrades and big marketing, you’ll want to hear our take on whether a product-first CEO can restart Apple’s innovation engine and lift the outlook for Apple stock.

We dig into the biggest possible swing factor: a foldable iPhone. We debate who would actually pay $2,000 for a phone, why a larger screen could change how people handle video and Zoom, and whether foldables could become the next premium category Apple dominates. From there, we shift to AI strategy and Siri. Apple’s slower approach might protect the brand, but it also raises the question of who they partner with and how consumers are supposed to judge competing AI tools on accuracy, cost, and usefulness.

Then we get practical about risk. We lay out what would make us sell, including supply chain concentration in China, diversification toward India, potential geopolitical shocks, and the quieter threat of talent leaving for richer AI salaries elsewhere. We close with a reminder of Apple’s biggest strength: the installed base and the service experience that keeps people locked in. If you’re thinking about buying more, trimming, or simply holding, this conversation gives you a clearer checklist. Subscribe, share this with a fellow investor, and leave a review, what would have to happen for you to change your Apple position?

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Transcript

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New CEO And Innovation Reset

Clem Miller 0:26

Hello, everybody, and welcome to Skeptic's Guide to Investing. I'm here with Steve Davenport and myself, Clem Miller. And today we're going to be talking about Apple's new CEO and whether they're likely to take new directions now that Tim Cook is retired. the new CEO's name is John Ternis and former product development guy for Apple. And so Steve, what do you how do you interpret or feel about the new CEO, John Turnus?

Steve Davenport 1:01

I'm pretty excited, Clem. I think that Apple um had kind of been in the last five years just releasing new versions with minor modifications to its flagship, you know, iPhone business. And in some ways, I think a lot of people have been disappointed that a market leader that you're paying a premium for in a product is not giving you, you know, in my mind, some of the best ideas and some of the best things. And so, for example, I think Samsung has had the foldable phone for a while. And people have asked, well, why doesn't Apple have a foldable phone? And usually what Apple does is it looks at its competitors, it looks at the technology, and it tries to wait until it's sure it can execute at a high level before it puts anything into its phones. And I look at him relative to Tim Cook, and Tim Cook was wonderful, right? I mean, 1400% rise in the stock during his 20 years. I mean, it's very hard to complain about a guy who's done that during a time of you know extreme uncertainty around COVID and around the other things that he's had to deal with, the great financial crisis in 2008. So I don't know what Turnus is going to face, but I look at his 25 years in product development, and you can see that there's fingerprints of Turnus's ideas and influence on a lot of the things that he decided to do, whether it's to open up the service side of the business, whether it's to open up um and try to do more with the um the with some of the other products that they have, the Apple T D and the Apple um earbuds. I I think that Turnus could be a real turning point for Apple, and that I think there's this new foldable could really push Apple in front of those high-end consumers and give them something they wanted, which is a much larger screen, much larger um feature to watch your videos on, a much better platform for you to do your Zoom meetings on. Because I think a lot of us try to use the phone as a Zoom meeting, and you know, we're we're sitting there squinting as we look into the to the iPhone. And I think that for a firm this big and having this much power, I think getting into this space with the extra margins that are there is gonna be a good thing for Apple.

Apple Stock And AI Leadership Questions

Clem Miller 3:47

So, Steve, you know, if you look back at the last couple of years, Apple stock has been kind of disappointing. And so the question is , you know, do you think that that will turn around? Or I know you don't have a crystal ball, but do you think that there's better prospect of it turning around in the future than it was in the past, or do you think Apple is influenced as other companies and tech might be by you know overall market views regarding AI and um you know AI direct and AI adjacent type of technologies?

Steve Davenport 4:33

I know I I think Apple has been smart to wait until there's a leader, until there's a kind of a a clear choice. When he wants to incorporate AI, you think about Siri and whether, you know, she's gonna, you know, is she gonna instantly become a lot smarter? , Apple has a lot more risk because its marketplace is a lot bigger. And that marketplace for the iPhone, you know, is critical to Apple's future. And I look at what a guy like Turnus brings, you know, he's a little younger, he's got a little more knowledge in the technology space. And I think that for the period that Cook was taking over um for jobs, I think there was a huge question mark, which is how can he replace the founder? How can he replace? And what he said is, I'm not jobs, I'm a business manager, and I'm gonna manage this business as well as I can. And I think he did in that transition offer Apple, you know, a great solution because he's he wasn't trying to be Jobs, he was trying to be Tim Cook. Yeah. And look at Turnus, and I think here's a company that has slowed down in engineering-wise, it's slowed down on innovation, and they're going to someone who is is part of the the new wave and the new innovation. So, in my mind, he could be just the right man for the job. I I have questions sometimes, as we've seen from Uber and other companies that have had these highly intelligent founders, but they don't have no idea how to run a quarterly meeting or how to, you know, how to state things in the press that are going to be useful and not be taken out of context. I think someone like Ternitz is gonna have to learn how to deal across the globe with very different needs and very different ideas.

Can A Product Chief Lead

Clem Miller 6:34

Yeah, Cook was really good at managing the whole US-China relationship.

Steve Davenport 6:39

Right. And I think that you know, when you look at anybody, you have to look at the breadth of their skills, not just the concentration. I think he's concentrated in an area that Apple needs help, which is innovation. I think the questions that are are out there is is he gonna be as good talking to world leaders? Is he gonna be as good as Cook? I think the answer is gonna be no at the beginning. But I also think that he got to kind of sit at his elbow for a long time and and learn from him. So my question is, is how has Turnus been impacted by his time with Cook? And how much of that did he absorb and and will you know we'll simply try to replicate it? But how much of it will he say, that's not who I am, just like Cook said, jobs isn't who I am. And so I think he's trying to differentiate himself right off the bat with these um foldable phones. And I think the foldable phone market at $2,000, you shook your head and said, Who would pay $2,000 for a phone? And my question is, aren't there a lot of people? Because if you look at the K-shaped economy that we have, the upper part of that K, the top 10 or 15%, um, I think they would buy a $2,000 phone if they thought it would eliminate their iPad. And that's really what it's doing is it's it's approaching the iPad size, and it's it's it's allowing you to then have a device that can be everything you want from a phone, but also you know, something that you can you can draw on, something you can use in a more you know um larger screen environment. So to me, he's got a lot, he's got a tough road to go. But if you look at Apple, you know they needed something in the last few years. And I think that something is innovation. And I think that he will, in my mind, be that engineer and background in product development that will help reshape Apple going forward, which I still don't understand why the television has never taken off the way I thought it should have. I kind of wonder if it's a more complicated sale, and therefore having a more complicated or a more technically astute CEO, maybe he can figure out the ways to integrate the Atlas TV. , but my my first thing is let's look at how the um the foldable phone goes, and I think that will tell us a lot about how Turnus's term as CEO is gonna go.

Brand First AI Integration

Clem Miller 9:31

So, you know, we're assuming as we're talking here, you and I are both assuming that Apple is going to maintain its strategy of emphasizing products and brand. Do you think that will continue to be the case?

Steve Davenport 9:48

Yes, I think they they their hesitancy on AI tells you that they cherish their brand. They don't want their brand to have a less than complete chatbot or AI service incorporated. I think they want to have the best. And so if I were them and I hadn't, you know, I made some alliances, I would look very hard at Gemini, I would look very hard at Cloud, I would look very hard at OpenAI, but I would be glad that you're not in the position that Microsoft's in, where they put all their chips in with Open AI a while ago, and they kind of are tied to it. So it almost makes, in my mind, if you look at Microsoft and Apple as the two kind of hegemonic leaders in the technology space for retail and business users, you know, I can't see Apple going with OpenAI. It just doesn't make sense to me to have a product and have a similarity to Microsoft when you want to be a leader and you want to be more unique. So I I look at that and say, that to me seals, you know, Gemini and Claude probably as the leaders and who will get um the AI integration with Siri. I hope it's it's a great integration because honestly, I find the whole thing right now just to be a schwogesport. I I don't understand how the average consumer is supposed to evaluate these different AI alternatives with the cost, with the depth, with the does it answer the questions that I need more, you know, accurately, or does it answer questions about, you know, I had a a client yesterday who started to use Claude, and he asked Claude how much energy he would need to go to the moon and back. And Claude gave him an answer, and then he said, But if you have a storm along the way, you might need more fuel. And you know, and I think that when we look at tools, we want that tool to understand who we are, and you can ask it more and more questions and give it more and more context of what's important to you, and that will make your experience better. But I really think there's gonna be, hey, this is the the this is the AI I need for designing products, this is the AI I need to service my customers, this is the AI I need for running my business. I think that there's gonna be an emphasis of one space or the other, and I don't think you're gonna be all inclusive because the process of training the inference and doing the things, it's not that easy to say, okay, we got a new version now, we've got to retrain it all over again for this new chipset. And I think that that's where it's gonna be important that whoever Apple cheeses in this AI space has to be able to update, has to be able to change, and has to be one of the people that individual consumers find helps them make their life better. The iPhone has made people's lives better. Maybe it's made us spend a little too much time on social media, but in general, it was a big move up from the flip phone and some of the other the Blackberry that we were using. And now you look at it and you can't imagine your life without this little mini computer in your pocket.

The Foldable Phone Bet

Steve Davenport 13:39

Yeah. My question is, what's gonna where's the mini computer going? I think the foldable phone is a good example. And my guess is if it becomes as popular as they expect, you know, it's obviously gonna, there's gonna be a a foldable light that will have, you know, maybe less expensive than, you know, if you if you if it comes out as a $2,000 model in five years from now, will it be $2,000? I think you'll probably have a a Lux at $2,500, and you'll have another model at $1,200 or $1,400 that will be what a lot of the general population will want to use. But I love the idea of more screen size without increasing the size in my pocket. So that's ultimately what they tried to go after, and we'll see if they're successful. I think that John Turney is going to have his career, unfortunately, hinge on this really going well and really handled well. And I think that he's in a position to do that. And I think that as an investor in Apple, I'm kind of looking forward to someone new at the reigns who has a ton of experience, a ton of um good things to his credit, and therefore I think he's well able to take Apple to the next to the next level for the next 10 years.

What Would Make Us Sell

Clem Miller 15:04

So, Steve, what would cause you to sell Apple?

Steve Davenport 15:08

, I think if I think that I think that Apple's moves in China um were a mistake to to put so much of their production capability in China. I think that if they were to switch from India back to China, if they were to make decisions that in my mind show an interesting cost more than an interesting quality or ease of use and ease of getting things in and out. I think that COVID showed that China as a source for your production has a lot of issues when their population can be manipulated or abused the way they were during COVID. I I don't think that that was one of the shining moments for Cook. I think that, you know, I would like to see them do more in the US, and I would like to see them, you know, have a very broad base and diversified production facilities. I know that makes it more room for error, but I guess I would say if I saw Apple retracing and reigniting or reunifying with more production in China, if I saw it really having trouble, maybe the innovation, you know, gene was with jobs, and that's where you know the company ultimately can't get back to that point because they've lost a lot of talent in this AI for various people at Apple going to these various AI shops and getting paid just what I would call ridiculous salaries. And so, therefore, if you lose talent, human capital is a key part of the organization. That human capital is motivated by the vision of the leaders and the future that they see of the organization. I don't think that they were all anti-Cook moves. I think they were pro the individual move to leave Apple and to go to one of these places because these people saw an opportunity. I hope that having Turney in this spot will make a lot of the people feel like he's one of us. He's gonna treat us well, and he's gonna take us to the new, you know, a new level. I think that organizations change, they're they're living organisms, and they're going to adjust. And I think that what would cause me to sell is if I felt like it wasn't adjusting and moving in the right direction. And I don't know if that's the answer you wanted or it's precise enough, but let's see how things go with the foldable phone, let's see how things go with their production. , and let's just see how things go as we progress in this you know environment of more and more upheaval. , I I'm not sure you know what would happen if China were to do anything in the Taiwan Strait with trying to blockade Taiwan. It would certainly, I think, cause some problems for a lot of people in Asia, because I think there would have to be a lineup of I'm with China or I'm against China. And how does that match with the production facilities and the things that are in place for Apple in in Asia? I I think there's a lot of stuff on the um in the future that we don't know. And I guess I would say how we have how we handle those unknowns is going to be a key for Apple going forward. It needs to be a flexible organization, but with its size, it's certainly very hard to do that.

Apple Store Service And Loyal Base

Clem Miller 18:52

So, Steve, anything else before we wrap up on Apple?

Steve Davenport 18:57

No, I just say that my trip to Paris, you know, I think I told you I had a problem with my charger. And I I walked into um the first day there into an Apple store. I talked to one of the service people, and I walked out 10 minutes later with my charger. And my trip was, you know, I I forgot my charger, and I'd say that's usually a pretty good way to blow up a vacation. And it was so easy. And I guess I would say that that in you know, the installed base of Apple is a huge, huge um plus. And how they continue to enhance that base and how they can continue to satisfy that base, I think they have a great opportunity to sell more products and to push more through, um, particularly in the area of the Apple TV and the foldable phone.

unknown 19:54

Okay.

Steve Davenport 19:54

Are you a buy are you a more of a buyer now that I've talked to you, Fun?

Clem Miller 19:58

, well, I own it, um, but I don't think I'm gonna make it a larger part of my portfolio, nor do I think I'm gonna sell it. , I think it's , but I do own it.

Steve Davenport 20:13

Okay. So what do I have to do to get you to buy more?

Clem Miller 20:18

Well, I'd like to see the reception given to Turnus as time goes on. I think I think the market might be just , you know, they're giving him an opportunity to prove himself. , you know, he could prove himself in the negative direction, too.

Steve Davenport 20:36

Yeah, I I mean that's that's why we play the game. , I think it's it's a good idea. I'm a I'm an owner now, and I've got a question about whether we should own more or not. But I I just think in the technology space, you know, I I feel like the AI multiples are are not outrageous for Apple versus other people, and therefore I'm kind of you know, I'm I'm a little bit plus in the Apple column right now. I love the choice of turns and I like the direction they're going. So we'll see.

Final Portfolio Takeaways

Clem Miller 21:10

Okay. Well, thank, thank you, Steve. , and thanks everybody for for tuning into this. and um and we're gonna be doing some more of these shortly. So you'll see a few of these come out over you know today and over the next over the next couple of weeks. Okay. Thank you very much.