Why Apple Bet on an Engineer to Lead the AI Era

Alex Frankos (0:00)

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Ben Katz (0:11)

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Luke Vargas (0:19)

A changing of the guard at Apple as hardware engineer John Ternus prepares to steer the company into the AI era. Plus, Spirit Airlines looks to Washington for a financial lifeline and the White House gives a boost to the psychedelic drug industry.

Alex Frankos (0:34)

A whole slew of companies have been trying to take these kind of age-old psychedelic drugs like MDMA, LSD, magic mushrooms and professionalizing them, turning them into legit treatments for mental illness. And President Trump signed an executive order basically telling the FDA to expedite the review of a bunch of these drugs.

Luke Vargas (0:54)

It's Tuesday, April 21st. I'm Luke Vargas for The Wall Street Journal. And here is the AM Edition of What's News, the top headlines and business stories moving your world today.

As we reported yesterday, Apple will be getting a new CEO come September when hardware division chief John Ternus takes the reins from Tim Cook. The leadership shakeup is the company's first in 15 years and comes as some critics contend that Apple needs to rekindle its innovative fire as its rivals pour resources into computing infrastructure and AI tools. And while Ternus will likely feel that pressure, Cook shared this advice for his eventual successor with journal columnist Ben Cohen in a recent interview.

Tim Cook (1:36)

So I would say, you know, be yourself, keep a firm North Star on the values of the company.

Because if you get the values right, if you keep the North Star in clear view, you may be blown off course a little bit, but eventually you will come back to the right path. And I have always found that to be true.

Luke Vargas (2:06)

Ternus' North Star is likely to be product design, having spent the last 25 years working on everything from AirPods to the iPhone and overseeing a shift from Intel to Apple designed chips that's helped solidify the company's command in the hardware space. And though Ternus has little experience with AI, our Deputy Tech Bureau Chief Bradley Olson says Apple isn't entirely out of the race.

Bradley Olson (2:30)

Apple is basically the delivery system for AI and will be for the foreseeable future for billions of people that have iPhones and use Apple products. But it's behind its rivals in terms of building models that people will use. And so how Apple thrives in the AI age is definitely an open question, that's something that Ternus sort of inherits from Cook.

Cook's reputation is someone who took the iPhone, which was one of the most successful products of all time, and used it to build an empire, which Apple really is today. And so Ternus will maybe have to step into that part of the role and the public facing aspects of being an executive. And I think with Cook staying on as executive chairman, maybe he'll have the space to do that.

Luke Vargas (3:14)

Apple's App Store AI revenue is set to top a billion dollars this year, simply by collecting subscription fees from companies like OpenAI. And analysts see that role expanding as Apple prepares to release an overhauled version of its Siri Assistant later this year.

Amazon is plowing an additional $5 billion into Anthropic, bringing its total investment in the AI company to as much as $25 billion. The deal will see Anthropic purchase more than $100 billion in Amazon cloud services, giving it much-needed computer power after a recent crunch forced it to throttle the performance of its clawed AI model.

Switching gears, high fuel prices are heaping more pressure on the aviation industry, leading the owner of Alaska and Hawaiian Airlines to yank its financial guidance. Shares of Alaska Air Group are down half-hours after the company forecast roughly $600 million in added expenses, more than enough to wipe out a single-digit increase in passengers. And higher costs are leading Spirit Airlines to seek a potential lifeline from the Trump administration. Aviation reporter Ben Katz has the latest as Spirit hopes to stave off potential liquidation after rising fuel prices thwarted its plans to exit bankruptcy.

Ben Katz (4:32)

What we know is that the administration is in talks with Spirit about potential government aid. That's according to people familiar with the discussions. One of those options would actually be the US government taking a stake in the embattled airline.

The government has generally avoided intervening to save a single airline in the past, but it has doled out billions of aid to the industry even as recently as the pandemic. We could learn a bit more about the structure of what Washington is looking into, how it could help the industry later today. A bunch of executives from a number of low-cost airlines are scheduled to meet with the Transportation Secretary, Sean Duffy. That comes as airlines have really been asking lawmakers to give them some relief from the pressures of these high fuel prices. So, while Spirit may be in the worst financial shape here and potentially the most desperate for a lifeline, they're not alone in asking for assistance to deal with the surge in fuel prices.