As Tim Cook prepares to step down as Apple CEO on September 1, incoming leader John Ternus faces the challenge of evolving the company’s massive services business into the AI era.

Key Points

• Apple’s services division, including iCloud and the App Store, generated a record $109 billion in fiscal year 2025, marking a 14 percent increase over 2024.
• Incoming CEO John Ternus, currently the senior vice president of hardware engineering, previously led Apple’s successful transition from Intel processors to proprietary Apple Silicon chips.
• The company’s AI strategy has faced recent leadership turnover, including the 2025 departures of AI head John Giannandrea and senior executive Robby Walker.
• Apple is currently pursuing a hybrid AI strategy that combines internal development, such as "Apple Intelligence," with external partnerships like its deal to integrate Google Gemini.

Why it Matters

The transition to John Ternus marks a pivotal shift for Apple as it attempts to pivot from a hardware-focused company to a platform-driven leader in generative AI. Success will depend on whether Ternus can effectively integrate advanced AI into Apple’s lucrative services ecosystem to maintain the company's long-term financial growth.