Apple Just Reported Earnings. With Tim Cook's Era Ending, Is the Stock a Buy for the Next Decade?

When iconic Apple (NASDAQ: AAPL) founder Steve Jobs handed over the reins of the company to Tim Cook in 2011, the market was worried about whether a new leader could keep steering the company forward. Cook has done an outstanding job of growing the business and creating shareholder value, and Apple stock has returned more than 2,600% to investors over his tenure. He recently gave his last earnings call as CEO, and with John Ternus set to take over as CEO, can Apple continue its stellar run? Let's dig in and see.

Cook is leaving on a high note

Apple has been reporting phenomenal performance, and as if as an ode to Cook's departure, Apple stock reached a $5 trillion market cap for the first time as he gave his last earnings call as CEO.

Apple CEO Tim Cook. Image soure: Apple.

Here are some of the highlights of the 2026 fiscal third quarter (ended June 27):

• Revenue increased 16% year over year to $109.4 billion.
• iPhone sales were up 22% to $54 billion.
• Gross margin expanded from 46.5% to 50.1%, inclusive of a tariff benefit.
• Earnings per share were up 29% to $2.02.

Cook played up the new Siri voice assistant that was unveiled at the Apple Worldwide Developers Conference in June. It's still in testing, scheduled for release within the next few months. He spoke about new investments in Apple Intelligence and how the company is considering options for running micro-large language models on personal iPhones.

He also noted that there is continued relentless demand for iPhones and Macs. Mac sales increased 29% year over year in the quarter.

Ternus is coming in at a challenging time

Apple stock soared leading up to the earnings report on enthusiasm about iPhone sales and Apple Intelligence. Alphabet had just announced a significant increase in capital expenditure, and the market is praising Apple's decision to contract with Alphabet instead of similarly spending on its own platform; Alphabet's planning to spend up to $205 billion this year alone, while Apple is paying it $1 billion annually.

However, Apple stock dropped after the earnings report on disappointing guidance. Apple is guiding for fourth-quarter revenue to increase 9% to 11%, while analysts were looking for 12%. Management attributes the pressure to currency headwinds and supply constraints, and it noted that demand remains very high.

The market also picked up on weakness in services revenue, which increased 12% over last year, down from a 16% increase in the previous quarter. Management said it was due to the same foreign-exchange headwinds and some softness in app sales. It remains to be seen how this will affect iPhone and other product sales in the coming quarters. Finally, Apple recently said it would raise prices on some products because of skyrocketing memory costs.

The long-term outlook is stable

Just before the report, investors were streaming into Apple stock, which they see as a safe alternative to many of today's tech and artificial intellgence (AI) upstarts. While the earnings update provides new and important information, it doesn't change the essential thesis for why Apple is a solid and reliable tech powerhouse -- an economic moat in its device and services ecosystem, which it continues to demonstrate quarter after quarter with robust iPhone sales and relentless demand.

Apple stock slid 9% after the report, taking its premium valuation down a notch; it trades at a price-to-earnings (P/E) ratio of 35, which is still rich, implying how confident the market is in Apple's future.

I think Apple is well positioned to keep growing and rewarding shareholders in the Ternus era, but don't expect wild, short-term growth; Apple is a long-term play.

Jennifer Saibil has positions in Apple. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool has a disclosure policy.