By Aditya Soni and Stephen Nellis
Nov 2 (Reuters) – John Ternus will host his first earnings call as Apple’s CEO on Monday, with investors looking to the company’s forecast to determine whether a blitz of new products can help offset rising costs for memory chips.
Ternus, who took the reins from Tim Cook in September, has overseen the introduction of Apple’s first foldable phone, smart home hub and Apple’s first touch-screen laptops. All of those products began shipping during the company’s current fiscal first quarter, amid what Cook had called a “100-year flood” of rising memory costs.
Apple will face scrutiny over three key issues: its crucial holiday-quarter outlook, Ternus’ remarks on AI and the revamped Siri, and rising memory-chip costs that analysts expect to drag quarterly profit growth to its weakest in six quarters.
Apple has been trying to position its AI offerings differently than rivals such as Meta Platforms’ Muse agent, which took App Store rankings by storm in recent weeks.
Rivals such as OpenAI, which Apple is suing over alleged trade-secret theft, are also developing devices aimed at displacing the iPhone as the central device in people’s lives. How Apple embraces AI could also have large implications for the future of its services business, whose slowing growth has worried investors after years of rapid expansion.
“Recent agentic innovation far outpaces our experience with Siri AI, but Apple has acknowledged that Siri AI … is far more focused on trust/privacy,” said Dan Morgan, portfolio manager at Synovus Trust, which owns Apple shares.
Apple is marketing Apple’s AI systems toward “everyday people” rather than Silicon Valley insiders, who are big users of frontier AI models from the likes of OpenAI.
Morgan added that investors want to know whether Apple could profit by distributing third-party AI agents through its App Store and taking a cut of the business they generate.
SHARES OUTPERFORM
For now, Apple’s reluctance to join the massive AI spending race has worked in its favor. Its shares have risen about 27% this year, outperforming tech giants such as Microsoft, Alphabet, Meta and Amazon as investors seek shelter from mounting concerns over the cost of building AI infrastructure.
Analysts expect Apple to report a nearly 11% rise in revenue to $113.39 billion for the July-September period, the company’s fiscal fourth quarter, according to LSEG data. Net profit is expected to rise about 6% to $29.04 billion.
Apple’s services business is expected to grow almost 10% to $31.56 billion, its slowest pace in more than three years.
IPhone sales are projected to climb about 15% to $56.54 billion, slowing from growth of about 22% in the previous three months. The results will capture just nine days of sales of the new iPhone 18 Pro models, while the iPhone Duo, the firm’s first foldable, came out on October 23, which will benefit the holiday quarter.
Remarks on how the Duo is selling will be scrutinized after some buyers of the device that starts at $1,999 in the US have reported cracks and lines along the inner display’s central fold, prompting Apple to offer replacements. Duo’s online orders had sold out within minutes.
IDC analyst Nabila Popal said she expects demand for the Duo to continue exceeding supply despite the screen problems. The test will be how quickly Apple can replace affected devices while supplies remain tight, she said.
Bank of America estimates Duo buyers face average delivery waits of 79 days, with shipments stretching into January.
(Reporting by Aditya Soni in Bengaluru and Stephen Nellis in San Francisco; Editing by Sayantani Ghosh)
