Apple downgraded as sell ratings pile up ahead of CEO transition

During Apple's ↘ 0.80% fiscal third-quarter earnings call on July 31, CEO Tim Cook confirmed it would be his last as chief executive and publicly endorsed his successor, John Ternus, who will take over on September 1. The call capped a 15-year tenure during which Cook transformed Apple into the world's most valuable company, while also delivering a quarter that beat Wall Street expectations — before a memory-shortage warning sent shares tumbling.

A Farewell and a Handoff

"This will be my final earnings call, and John will lead these calls going forward," Cook told analysts, according to a transcript published by 9to5Mac. "He is truly one of a kind, and there is no better person to take the helm of the company."9to5mac

Ternus, currently Apple's Senior Vice President of Hardware Engineering, joined Cook on the call alongside CFO Kevan Parekh. Cook announced in April that he would step down effective September 1 and transition to executive chairman, with Ternus succeeding him as CEO. The repeated public endorsements appear designed to ease investor concerns about a leadership change at the world's largest company by market capitalization.macrumors+2

Strong Quarter, Clouded Outlook

Apple reported $109.4 billion in revenue for the June quarter, up 16% year-over-year, with diluted earnings per share of $2.02, up 29%. Gross margin came in at 50.1%, boosted by approximately two percentage points from tariff refunds.apple+1

But the quarter's headline numbers were quickly overshadowed by Cook's warnings about memory supply constraints. Apple shares fell nearly 10% the day after the call as Cook flagged that memory shortages — driven by surging AI-server demand and a market with only three primary DRAM suppliers — would intensify in coming quarters. "Beyond September, we see the market pricing for memory continuing to increase, which could drive an increasing impact on our business," Cook said. Analyst Ming-Chi Kuo reported on August 10 that Apple is already scaling back 2026 hardware shipments due to DRAM shortages.macrumors+2

New Headwinds for a New CEO

The supply challenges have compounded with a fresh round of Wall Street skepticism. On Monday, Jefferies ↘ 0.87% downgraded Apple to underperform from hold and cut its price target to $263.66, citing the cancellation of a planned all-glass 20th-anniversary iPhone and limited progress on AI initiatives. Six firms now carry the equivalent of a sell rating on Apple, according to Bloomberg data.finance.yahoo+2

The confluence of supply headwinds, margin pressure, and analyst downgrades means Ternus will inherit a company delivering record revenue but facing questions about what comes next. Cook, for his part, appeared intent on smoothing that path. "The transition is going seamlessly," he said, "and I am beyond excited for John to step into his new role and lead Apple into its next era."9to5mac