3 Reasons to Buy Apple Stock on the Dip as CEO Tim Cook Steps Down

Apple (NASDAQ: AAPL) recently reported its financial results for the third quarter of fiscal year 2026, which ended on June 27. It was the last full quarter with Tim Cook as CEO. He is set to step down from his role on Sept. 1 and become the company's executive chairman. Apple's senior VP of Hardware Engineering, John Ternus, will take the helm. Apple's shares dropped on the heels of its earnings release, for reasons unrelated to the CEO change. However, there are good reasons to buy the dip. Let's discuss three of them.

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1. The iPhone is not dead

The defining product of the Tim Cook era, by far, was the iPhone. It remains the company's largest segment by sales. However, some investors have said for years that the iPhone's best days are behind it. This world-famous device no longer generates the kind of buzz it once did. That's true. But in recent quarters, the iPhone has been impressive. The latest model, the 17, is driving a solid renewal cycle and helping Apple post some of the best year-over-year revenue growth in years.

AAPL Revenue (Quarterly YoY Growth) data by YCharts

The lesson here is that with some appropriate tweaks and a fair number of new features, Apple can still convince millions of people to upgrade their iPhones -- or even switch from competitors. Apple is reportedly working on one of the most important iPhone revamps it has introduced in years. The company will apparently launch a foldable version of the device, according to some reports. Considering the massive success some smartphones have had in this niche, an iPhone Fold could meaningfully expand Apple's installed base and power more impressive sales growth in the coming years.

2. A growing installed base

During its third quarter, Apple's installed base reached an all-time high across all categories and geographic segments. The company has about 2.5 billion active devices in circulation, representing a massive ecosystem of users that it is already monetizing in umpteen ways. Under a new CEO, Apple will likely double down on its efforts to monetize its large user base. We could see improved artificial intelligence features that will justify monthly fees, or seamless AI integration across more of the company's existing offerings (health, fintech, and more), leading to much-improved features.

Whatever direction it chooses, Apple's massive installed base, which generates significant amounts of data, is a powerful advantage for the company and can help it capitalize on AI over the long run.

3. Returning capital to shareholders

Apple is also worth considering for its dividend and share buyback programs. The company offers a forward yield of 0.4%, which isn't that impressive, but it has increased its payouts by 89.5% over the past decade. It has plenty more cash to continue doing so. Apple's willingness to return significant capital to shareholders through dividends or share buybacks is another great reason to buy the stock.

Apple can bounce back

In its third quarter, Apple posted revenue of $109.4 billion, up 16% year over year. That was well within its guidance. Further, Apple's earnings per share came in at $2.02, up 29% compared to the year-ago period. The company's results were good, but the stock fell on weak guidance, partly due to ongoing supply constraints. Despite this problem, the stock's long-term prospects are attractive. Investors should look beyond near-term issues and load up on Apple's shares on the dip.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.