BofA expects Ternus to push Apple into new products and AI-driven technology as he takes over from Tim Cook in September.
Apple may be one of the world’s most valuable companies, but Bank of America believes its next CEO will need to give investors something they have not seen enough of lately: new products and fresh ideas.
The bank has reiterated its Buy rating and $380 price target for Apple ahead of John Ternus taking over as CEO from Tim Cook.
BofA expects much of Apple’s existing business model to remain intact. But it sees room for Ternus to push the company into new products, deeper AI integration and areas that received less attention during Cook’s tenure.
Tim Cook leaves behind a massive business.
Cook’s 15-year tenure transformed Apple into a company with roughly $4.5 trillion in market capitalisation, according to BofA.
His strategy focused heavily on expanding Apple’s installed device base and generating more revenue from that ecosystem through services including Apple Pay, the App Store, Apple Music and Apple TV+.
BofA analyst Wamsi Mohan expects much of that foundation to remain unchanged under Ternus.
The challenge is what comes next.
Apple now needs to find new sources of growth without weakening the ecosystem that made the company so valuable in the first place.
AI could change Apple’s next chapter.
BofA sees artificial intelligence as one of the biggest opportunities for Apple’s next phase.
Rather than relying primarily on cloud-based services, Apple could increasingly put AI capabilities directly into its devices.
Potential areas include:
- AI-powered personal assistants
- Smart glasses
- Smart rings
- AirPods with cameras and additional sensing capabilities
- Smart-home automation
- On-device AI designed to improve productivity
The idea is consistent with Apple’s strength in hardware. Instead of simply giving users access to AI through an app or cloud service, Apple could make AI part of the devices people already use every day.
Apple is spending more on research.
Apple has already begun increasing its investment in research and development.
The company recently raised R&D spending by 32% to $11.7 billion in its fiscal third quarter, while operating expenses increased 23% to $19.1 billion.
That remains below the spending levels of some major technology rivals.
Amazon, for example, reported $54 billion in capital expenditure in its second quarter, highlighting how differently the two companies approach investment.
BofA believes Apple may have more room to increase spending on R&D, capital expenditure and acquisitions as the pace of AI development accelerates.
The bank also points to Apple’s departure from its previous net-cash-neutral objective as a possible sign that management has greater flexibility to deploy capital.
New products could matter more than ever.
For Ternus, the pressure may ultimately come down to Apple’s ability to create another major product category.
The company has repeatedly demonstrated its ability to turn hardware into enormous businesses. But investors are increasingly looking for evidence that Apple can repeat that success beyond the iPhone, Mac, Watch and AirPods.
Wearables, smart-home products and AI-enabled devices could become important parts of that strategy.
Acquisitions could also play a larger role.
BofA notes that Apple historically placed less emphasis on mergers and acquisitions under Cook. That approach could change as the company looks for ways to accelerate its capabilities in rapidly developing technologies.
A cautious outlook for the iPhone
BofA remains positive on Apple, but it expects some volatility from the company’s planned staggered iPhone launches.
According to the report, the Pro, Pro Max and Fold models are expected in September, while the base model and Air are expected in March.
That timing could make Apple’s financial results less predictable during the second half of 2026.
Still, the bigger question extends beyond one iPhone cycle.
Apple has spent years strengthening the ecosystem around its existing products. Under Ternus, investors will be watching whether the company can create the next reason for consumers to buy an Apple product that did not exist before.
That may be the real test of Apple’s next era.
Source: Business Connect
John Ternus, Apple’s incoming CEO (Credit: Apple)
