Even with Apple's stock slump, Tim Cook is the right leader for the AI era

Dow Jones
Jul 14

MW Even with Apple's stock slump, Tim Cook is the right leader for the AI era

By Mark Hulbert

A rising Wall Street chorus believes Apple needs new leadership. Why that's tone deaf.

Apple's collaborative culture may have kept it from spending huge sums on AI projects that have little commercial application.

Replacing Tim Cook as Apple's $(AAPL)$ chief executive, an idea that is growing in some corners of the financial world, seems like a bad idea.

It's understandable why Wall Street would be frustrated. Apple's stock has lost around16% so far this year, in contrast to a roughly 6% gain for the S&P 500 SPX. To be sure, Apple's stock has performed phenomenally over the past decade, as you can see from the chart below. But lagging behind the market by 22 percentage points over just six months is too much for some analysts to tolerate, and they are arguing that Apple needs "dramatic change" and that Cook is not the leader for that job.

Almost a decade ago, some argued that Elon Musk should replace Cook as Apple's chief.

Ironically, a similar argument - that Cook needed to step down - was made almost a decade ago. At that time, some went further, urging that he be replaced by Tesla's $(TSLA)$ Elon Musk. Given Musk's erratic behavior in recent years, you might find it hard to believe that anyone seriously entertained that prospect. But some did, prompting me in the summer of 2016 to devote a column to arguing that it would be a bad idea.

I based that column on research conducted by Gautam Mukunda, then at Harvard Business School and currently at Yale School of Management. His research focuses on the qualities that differentiate good and bad leadership, and he has summarized his findings in a book, Indispensable: When Leaders Really Matter.

I reached out to Mukunda recently about the rising chorus to push Cook out. In an interview, he stressed that he is neither an Apple insider nor a Musk critic. But he reminded me that what made Musk a bad fit for Apple nearly a decade ago was the incompatibility between his approach to leadership and Apple's internal culture.

"What makes Apple special is its flawlessly engineered and integrated products and its internal culture can only be achieved as a team sport," he said. "You have to have people across the institution who are working together collaboratively. Musk's style is not conducive to producing that."

No one today is suggesting that Musk be the one to bring about dramatic change at Apple. But Mukunda said the same principles apply now as then. Unless Apple's internal culture is failing, the company's CEO - like Cook - must have a leadership approach that is consistent with that culture.

Critics of Cook's leadership have argued that Apple's internal culture is failing, as evidenced by the company's delay in getting on board with AI. But Mukunda contended that an equally plausible narrative is that Apple's culture has prevented it from spending huge sums on AI projects that have few commercial applications.

He explained: "Apple has this fanatical commitment to everything being perfect. And it is very clear that the current generative AI technologies cannot achieve that. So maybe Apple is doing what it's always doing. It's being distinctive. It's cutting against the grain. It's saying, when this stuff is ready, we will be there. But not before."

Furthermore, he continued, it's entirely possible that AI companies are in a valuation bubble that will soon pop. If so, then perhaps the proper narrative should be, "Apple's just not chasing the current investment fad, in which case more power to them."

Mukunda suspected that "investors' discontent with Apple comes from looking at the valuation of Nvidia (NVDA) and asking Apple: 'why aren't you doing that?'" But they want Apple to be something that it historically has not been, which is to be the technology leader.

To those of you who think becoming the AI technology leader should be Apple's "thing," Mukunda pointed out that "there are a lot more ways to make Apple worse off than there are to make it better. If you are one of the largest, most profitable institutions in the history of the world, doing crazy things is a bad idea."

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

More: Should Apple replace Tim Cook as CEO? These analysts are calling for dramatic change.

Also read: Tesla and Apple don't belong in the 'Magnificent Seven' anymore. These two hot tech stocks should replace them.

-Mark Hulbert

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

 

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July 14, 2025 11:28 ET (15:28 GMT)

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