Will a Leadership Change Be Enough to Turn Apple Around?

Key Points

• COO Jeff Williams is retiring, and will be replaced by a 30-year Apple employee and top executive.

• Apple's growth has stalled in recent years and it will be up to the new COO to make some progress.

• 10 stocks we like better than Apple ›

There's a leadership change at Apple (NASDAQ: AAPL). Longtime Chief Operating Officer Jeff Williams is retiring and will be replaced by Sabih Khan, the company's senior vice president of operations. The transition is scheduled to occur later this month, but will it help Apple stock turn around what's been a disappointing year?

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Apple has long been one of the best growth stocks you can own -- the maker of the iPhone, iPad, Apple Watch, and MacBook computer and owner of its massively profitable App store. From 2011 to 2024, Apple was the most valuable company in the world.

But lately, it's faltering. Apple still brings in solid revenue and decent profits, but its growth has been negligible for the last two years. That's why Apple stock is slipping in the rankings of the world's biggest companies, passed in the last two years by both Microsoft and Nvidia, and the stock is down 16% so far this year.

Kahn has his work cut out for him if Apple is going to regain any of its mojo. I think you would be right to be skeptical about Apple turning around anytime soon.

Image source: Getty Images.

Meet Apple's new COO

Khan is an Apple insider; he's been with the company for 30 years and was promoted to an executive position as senior vice president of operations in 2019. His job involved managing the company's global supply chain -- a difficult job, as Apple manufactured its iPhones and other electronics in China, India, and Vietnam. Before Apple, he was an applications development engineer and key account technical leader at GE Plastics -- a division that General Electric later sold to Saudi Basic Industries Corp.

Now, he'll be stepping into a role where he will manage not only the supply chain but will be in charge of expanding Apple's customer base. Meanwhile, the design team will begin reporting directly to CEO Tim Cook. And Apple's design team that actually needs the most help, in my opinion.

Apple has become stagnant

One of the best things about Apple back in its growth heyday was the innovative products it came out with -- the Macintosh computer, which of course gave way to the MacBook; the iPod that for the first time made it possible to carry a music library of hundreds of songs in your pocket; the iPhone, which is essentially a complete computer that established the modern smartphone; the iPad that allowed people to work and play on tablets rather than just use them to read; AirPods, which made wireless earbuds popular; and the Apple Watch, with wearable tech that made it easier for people to manage their health.

Designers were also quick to make improvements to the iPhone with each model, introducing things like facial recognition, a screen that responded to pinch and swipe actions, and forward and rear-facing cameras. Every time Apple came out with a major new improvement to the iPhone, it would get billions in sales as people rushed to trade in and receive the latest tech.

Apple still rolls out new smartphone models -- it's currently selling the iPhone 16 -- but the groundbreaking innovations don't happen nearly as often. That means people are more willing to hold on to their older phones, as long as they're still working fine, rather than spend up to $1,000 on a newer model that isn't much different.

AAPL Revenue (Annual) data by YCharts

And that's a problem for Apple that is reflected directly in the company's recent earnings. As the chart shows, Apple's revenue and earnings have been relatively stagnant since 2022. While it's great that Apple is still making money, it doesn't have the same growth story that it had five or 10 years ago.

What's ahead for Apple?

To be frank, Apple's promotion of Khan strikes me as a move to maintain the status quo rather than signaling aggressive expansion. And maybe that's OK. By turning over the design team to Cook, Apple's not bringing in any new blood, so I'm not convinced that there will be any dramatic innovation.

It's time to recognize Apple for what it is today -- a reliable value stock with a decent forward price-to-earnings ratio of 26.3 and a price-to-sales ratio of 8. For a technology company, those aren't outrageous numbers. And Apple also pays a growing dividend (the yield is 0.5%) that makes the stock a little more appealing for an income investor.

But Apple's days as a dynamic growth play appear to be over, for now.

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Patrick Sanders has positions in Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends GE Aerospace and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.