Analysts have suggested that Apple should consider changing its CEO due to the failure of its AI strategy

Apple needs a CEO to replace Tim Cook, a different kind of person: focused on products rather than logistics, analysts at research firm LightShed Partners said. They noted the company's lag in AI technology, which the iPhone maker has been unable to do anything about for more than a year, and pointed to the need for a dramatic change. The publication comes just after the announcement that one of Cook's closest deputies, Chief Operating Officer Jeff Williams, will leave the company.

According to LightShed Partners analysts Walter Paisek and Joe Galone, Apple should think about replacing CEO Tim Cook with a new candidate, as the iPhone maker's problems with artificial intelligence create significant risks for the company. That's according to a note published on LightShed Partners (available after registration).

"Apple needs a CEO with a focus on products, not logistics. The company has launched too many product lines that ultimately failed to scale or failed to materialize at all. But AI is not an area where you can just "pull the string." A misstep in AI could radically alter Apple's long-term trajectory and its ability to continue to grow," the analysts said. Cook was a supply chain executive at Apple before taking over as CEO in 2011.

The company promised more breakthroughs in artificial intelligence at its WWDC developer conference in 2024 than it has been able to deliver, and little has changed since then, LightShed analysts said. At a time when AI is "reshaping industries around the world," Apple "risks being among those who can't withstand the pressure," they warned.

"While everyone says Apple has too big a 'moat' (moat, sustainable competitive advantage. - Oninvest) for it to be replaced, we've already seen such moats collapse in technological revolutions," the analysts cautioned.

In a note, analysts at LightShed Partners note that the company's main driver of revenue growth right now is services, which are also vulnerable:

- The more than $20 billion a year the company receives from Google for its default search status in its Safari browser is revenue that regulators could block in the future.

- The fees Apple deducts from App Store transactions are also struggling with increasing regulatory pressure.

- Apple's streaming services and original movies generate a minuscule share of revenue. At best, they work as marketing tools, but not as real growth drivers, according to Paysick and Galone.

"Tim Cook was the right choice at the time of his appointment and has certainly done a tremendous job," Paysick and Galone note. - Under his leadership, Apple has sold more than $2 trillion worth of iPhones, and iPhone sales may even rebound in the current quarter, thanks to demand driven by concerns around duties and stabilizing upgrade cycles that may have finally bottomed out. But the endless talk of a 'new supercycle' still sounds comical."

Apple shares are up more than 1,400% since Cook was appointed CEO, noted Bloomberg. By comparison, the S&P 500 index is up about 430% over the same period. But Apple's stock has lagged far behind its peers this year, falling 16%, while Meta Platforms shares, for example, are up 25% and Microsoft's securities are up 19%.

On July 9, Apple announced that COO Jeff Williams, for years considered the second man at the company and a possible successor to Cook, will retire before the end of the year. This is significant personnel news amid a challenging period for Apple, which is facing rising costs due to duties, falling iPhone sales, and falling behind competitors in AI.

Williams' post will be taken over by Sabih Khan, another "veteran" of the company, as early as July. Khan has been with Apple for 30 years, and as of 2019, he'll be joining top management as senior vice president of operations, responsible for supply chain and manufacturing. He will now report directly to Cook and likely get additional areas of responsibility, noted Bloomberg.

"Wall Street has treated the resignation of Apple's COO as an event that is unlikely to lead to major change," Paysick and Galone wrote in the memo. - But isn't change what Apple needs right now?".

This article was AI-translated and verified by a human editor