Apple's next CEO John Ternus 'must define Apple's future as ferociously as he defends its past'

Apple ( AAPL ) revealed on Monday that CEO Tim Cook will step down from the post he has held for roughly 15 years and be succeeded by senior vice president of hardware engineering John Ternus .

Ternus inherits a company with a roughly $4 trillion market cap and annual revenue north of $400 billion. It's among the most recognized brands on the planet and has helped popularize everything from smart watches and tablets to wireless headphones.

But Ternus will also step into his new role at a time of major technological upheaval driven by the AI explosion. Apple is largely seen as a laggard in AI thanks to its long-delayed updates to Siri and Apple Intelligence. He'll also have to contend with a world that is quickly looking for ways to create AI-centric hardware.

What's more, he'll have to prove he's as politically savvy as his predecessor at maneuvering throughout Washington and across foreign governments.

And he'll have to do all of that while moving one of the world's most valuable companies into the future.

"The baton will pass effortlessly to Ternus, an insider" Francisco Jeronimo, vice president of client devices at IDC, said in an email. "But he must resist the temptation of incrementalism that has plagued Apple of late and escape the iPhone's gravitational pull in his quest for the next disruptive form factor."

"As Ternus assumes the helm, he must define Apple's future as ferociously as he defends its past," Jeronimo said.

One of Ternus' first items of business will be addressing the company's AI shortfall. Apple was caught flatfooted by the launch and incredible interest in OpenAI's ( OPAI.PVT ) ChatGPT, and it has struggled to regain its footing in the growing AI space.

Ternus will need to ensure that Apple becomes a larger player in AI to both avoid falling further behind rivals Samsung ( 005930.KS ) and Google ( GOOG , GOOGL ) and appease Wall Street, which has been critical of the company's lack of AI innovation.

"We can't say it enough, but Apple cannot watch the AI era from the sidelines as this 4th Industrial Revolution takes hold," Wedbush analyst Dan Ives wrote in a research note.

"In essence, Apple is a toll collector on the consumer AI highway, and Ternus needs to finally get the AI strategy right and focus on monetization going forward," he added.

Apple will likely launch its new generative AI-powered version of Siri at its WWDC event in June, serving as a starting point for the company as it repositions itself in the AI race. Still, it will have to go beyond a better Siri if it's going to improve its standing among consumers and investors.