John Ternus is expected to usher in a renewed focus on hardware as Apple positions itself for the age of AI.

Apple's Tim Cook will relinquish the CEO position, leaving behind an impressive legacy after growing the company to a $4 trillion market capitalization from under $350 billion 15 years ago.

Over Cook's 15-year tenure as CEO, Apple's stock has risen 1,932%, beating the S&P 500's 504% increase, according to Dow Jones Market Data. Apple's stock was the 38th-best performer in the index over that period of time.

Cook plans to step down on Sept. 1, at which point he'll become the company's executive chairman. Cook will be succeeded in the CEO position by John Ternus, Apple's senior vice president of hardware engineering.

Chart showing Apple's stock price and significant milestones during Tim Cook's tenure as CEO, from 2012 to 2025.

Ternus faces big challenges as he assumes the helm of the world's second-largest company. He'll need to make Apple a formidable force in artificial intelligence while battling supply-chain constraints that are gripping the consumer-electronics industry.

Investors have been especially displeased with the botched rollout of Apple Intelligence, which was first announced in 2024 but has been continuously delayed. Apple is expected to unveil a fully revamped Siri in September, powered by Google's Gemini model.

Yet the leadership change may suggest an increased focus on hardware for Apple going forward. "While executive changes at Apple are rare, we think the appointment of John Ternus as CEO makes sense given the company's history of leadership rooted in the core hardware business, particularly the iPhone," Evercore ISI analyst Amit Daryanani wrote in a note to clients.

Under Ternus, Apple could spearhead the next form factor for the AI era, Forrester analyst Dipanjan Chatterjee wrote in a Monday note. "While Cook has kept Apple's growth trajectory moving at a steady clip, he has not overseen a step-change innovation that would reset Apple's competitive position for the next two decades, as [Steve] Jobs did with the iPhone," he said.

Ternus joined Apple's product design team in 2001, playing key roles in the introduction of the iPad, AirPods and many other products. Most recently, Ternus oversaw the launch of Apple's budget laptop, the MacBook Neo, which was met with enthusiastic demand from consumers.

The company released the iPhone Air last year. This year, Apple is rumored to be developing a foldable phone.

As Apple chases a new iPhone form factor, it faces soaring component costs as demand for memory chips from AI data centers outstrips supply. Companies face the difficult choice of raising prices for customers or cutting back on memory capacity in their devices. But for Apple to successfully roll out Apple Intelligence across its installed base, its devices will need robust memory to power AI workloads. In a note earlier this month, Seaport analyst Jay Goldberg wrote that Apple is buying up memory chips at a premium in a bid to seize share from competitors.

While Ternus faces challenges, so did Cook when he took over for legendary CEO Steve Jobs. Cook orchestrated the growth of Apple's services business, expanding the company beyond its hardware roots. He also put a maniacal focus on Apple's supply chain, owing to his prior stint as the company's chief operating officer.

Apple shares dipped 0.6% after hours on Monday following the announcement. The stock has gained fractionally year to date, but is up 37% over the past 12 months.