New Apple CEO John Ternus chalks up some early wins, but the honeymoon is over

John Ternus, Apple’s new CEO, has spent the first two months in his new post celebrating a batch of fresh products, particularly the release of the foldable iPhone Duo. On Monday, the 51-year-old executive introduced himself to Wall Street for his first quarterly earnings call.

While Apple beat September-quarter earnings expectations, investors traded the stock down in after-hours trading due to the company’s outlook on margins, which it said will continue to be squeezed by a shortage in memory chips, and slowing growth in its Services segment without a clear answer to how that may rebound. The company has also attempted to tell its AI story through its revamped Siri AI product, but investors don’t seem convinced yet that Apple has the winning formula for the AI age.

On the call with analysts following earnings, Ternus fielded some questions but also delegated answers to Chief Financial Officer Kevan Parekh and Chief Operating Officer Sabih Khan, who Apple said would participate in earnings calls moving forward, something the company hasn’t done for years. Ternus projected confidence on the call, but he appeared to stick mostly to scripted marketing points, such as “Apple is the greatest company in the world,” that subdued the conversation.

By some measures Apple is performing at its best ever (its September iPhone sales set a record), but the more nuanced reality is that the $4.9 trillion company has had to offset surging memory chip prices by raising its own prices, and it is relying on its massive install base to carry it forward. Compounding the pressures are supply chain shortages for products that include the iPhone Duo, with new orders for the phone not arriving until the end of January.

“What we’re seeing with memory pricing right now is unprecedented,” Ternus told analysts on the Monday call. “That has put pressure on our prices.” He added that beyond the December quarter, the company expects the pricing for memory purchases to continue to increase.

Apple said it expects its gross margin for its December quarter to be between 45% and 46% after posting a margin of 47.9% for its September quarter, when tariff refunds provided an approximately one-percentage-point boost. The decline, the company said, reflects the continued cost of memory, as well as costs associated with ramping up Siri AI.

“We’re going into this [holiday period] with more downside than upside,” Apple investor Gene Munster told Fortune in an interview prior to Apple’s earnings. On X, Munster wrote after the earnings posted that, “It’s clear they don’t want to talk about personalized agents. They’re the biggest risk to the Apple ecosystem.”

Ternus and Parekh offered few details when asked by analysts about the roadmap for Siri AI, the company’s revamped assistant. When asked about the industry shift toward consumer AI agents such as Meta’s Muse assistant, Ternus noted that Siri is “primarily request-based today,” though he said the assistant is built on an architecture that makes it possible to substantially expand its capabilities over time

He described agentic capabilities as “promising tools for users,” but cautioned that users must be fully aware of what access they grant, and he stressed user security and privacy.

Apple has touted Siri AI, which has been rolling out to users in beta mode, as a key upgrade that is central to new products such as the home devices it recently launched, which included its first smart home display. The new Siri is designed to understand what is on a user’s screen and act on it, help with writing, and search a user’s device for context, among other features.

Reviews have been mixed on the revamp. Some analysts have said they liked the new features, but overall, the assistant has lagged well behind leading chatbots from OpenAI and Anthropic, as well as a wave of personalized agents from Meta and others that have ushered in a new kind of AI assistant capable of shopping, checking bank statements, and other tasks on its own.

“Siri AI is much more capable and functional today, but how do you take it to the next level?” Wamsi Mohan, an analyst at Bank of America, told Fortune.