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By Bill Peters

A rare Monday earnings report for Apple will give investors a glimpse into how new CEO John Ternus is managing inflated memory prices and a tougher backdrop for consumer spending

Apple reports quarterly results on Monday, as it raises prices amid tighter memory-chip supplies.

Apple's quarterly results on Monday will be the first under new CEO John Ternus - and his thoughts on faster product rollouts, price increases and artificial intelligence will likely be front and center for Wall Street.

Those results will arrive after Apple (AAPL) on Friday reclaimed the title of world's largest company, in a show of how the iPhone maker's more disciplined approach to AI spending has largely spared it from a selloff gripping the technology sector.

However, Apple is due to face questions about the impact that pricier phones and laptops are having on consumer spending, as the tech industry grapples with an ongoing memory-chip crunch brought on by the AI race.

"This is a tricky quarter for Apple with some big cross-currents," D.A. Davidson analyst Gil Luria said over email.

Aside from dealing with higher memory costs, Apple will have a higher bar to clear this time around, following a big year for iPhone upgrades, he said. However, the new foldable iPhone Duo, which hit Apple Stores last month, could help lift future sales - even though the rollout hasn't exactly been perfect and the launch won't be a factor in the upcoming set of results.

As for Ternus - formerly Apple's senior vice president of hardware engineering - many of the questions on Apple's earnings call "will be about the plans for new hardware form factors and how they will feature new AI capabilities," Luria said.

Other analysts agreed. "Given this is new CEO John Ternus' first public earnings call, he is likely to get questions about his views on AI," Daniel Morgan, senior portfolio manager at Synovus Trust Co., said in a note on Friday.

Morningstar analyst William Kerwin told MarketWatch that Ternus would likely offer continuity for the company on his first call, as he settles into the CEO job after Tim Cook's 15-year tenure in the role. Ternus became Apple's CEO in September.

"However, with Ternus being a product guy, and Apple having unveiled a plethora of new products lately (iPhone 18, iPhone Duo, MacBook Pro with touch screen) I expect him to really focus there," Kerwin said.

Ethan Feller, stock strategist at Zacks Investment Research, said he wasn't sure how much detail Ternus would offer on his vision for Apple. But he also said that two months into his leadership, Apple is rolling out more products at a faster clip - something that could be a priority for Ternus, given his background as an engineer. Along with the Duo and the touch-screen MacBook Pro, the company has also unveiled or launched a new iPad mini, a new HomePod and introduced HomeView, a home-management device, he noted.

However, the Duo's rollout has hit snags recently. Feller said that a lot of apps weren't yet optimized for the Duo, which goes for anywhere between roughly $2,000 and $3,000, depending on the version, and some users said their phones' foldable screens had cracked shortly after buying them. Apple, Feller said, had previously been known to wait until a product was nearly perfect before sending it to stores.

"So, this is a notable change in how the company launches products," he said. "I don't expect a major departure under Ternus, but I do expect more launches, which is fun for Apple's very loyal customer base."

The company is also breaking from earnings convention by reporting results on a Monday for the first time since 2015, according to Dow Jones Market Data. Most recent releases have dropped on Thursdays.

Apple's stock is up 26.8% so far this year. As of Friday, the stock was trading at around $345, a bit off recent highs.

Analysts in the past have worried that Apple was falling behind on AI adoption. But Kerwin said the company's decision not to plow into the current spending race - instead focusing on incorporating AI into products and software - was a strength. He noted that the company's partnership this year with Google Gemini effectively outsourced model development to that platform. And he said that Apple only needed to be "good enough in AI to defend the iPhone ecosystem."

However, that iPhone ecosystem is getting more expensive. Apple recently raised prices on some iPhone models by $100. Feller said that the price of a MacBook Air was $999 a year ago; now it starts at $1,299. However, he said that the MacBook Neo represented a lower-cost option.

Morgan, at Synovus, also said investors on Monday will be looking for an update on the adoption of Siri AI. And, as with other Big Tech companies, investors will also be looking for details on Apple's computing and spending needs, he said.

Still, Wall Street has remained concerned about Big Tech's super-sized spending plans on AI. And fresh signs have emerged that the handful of multitrillion-dollar tech companies that often dictate the S&P 500's SPX direction aren't the growth drivers they once were.

The so-called "Magnificent Seven" - which along with Apple includes tech behemoths Alphabet (GOOG) (GOOGL), Amazon (AMZN), Meta Platforms (META), Microsoft (MSFT) and Nvidia (NVDA), as well as automaker Tesla (TSLA) - are now reporting lower earnings growth than the other 493 S&P 500 companies for the third quarter, according to a FactSet report released on Friday.

Five of those seven companies have already reported earnings for the third quarter. On Sept. 30, the estimated earnings growth rate for those companies was 33.6%, according to that report. But today, the blended estimate for that growth - or results from companies that have reported and estimates for those who haven't yet - has slipped to 22.6%, after only two out of the five "Magnificent Seven" companies so far reported earnings per share that topped analysts' expectations.

By comparison, the blended earnings growth rate for the rest of the index has increased to 32.6% today from 27.8% on Sep. 30, FactSet said, with 82% of all S&P 500 companies reporting earnings per share that were above expectations.

If those trends stick, it would mark the first time that the "Magnificent Seven" reported lower earnings growth than the other 493 S&P companies since the fourth quarter of 2022 - right before the AI race took off.

-Bill Peters

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