At Apple this week, it marked the end of an era. After 15 years as CEO, Tim Cook stepped aside and was replaced by longtime executive John Ternus. As Fortune colleague Sebastian Herrera wrote in a just-published profile of Ternus, he takes charge at a tense moment for the $4.75 trillion company.

Ternus, who previously served as Apple's senior vice president of hardware engineering and oversaw the company's hardware engineering organization, is only the third person to lead Apple since co-founder Steve Jobs returned to the company in 1997 — following Jobs himself and Cook, who took over as CEO in 2011. The handoff echoes that earlier transition, when Apple deliberately chose an operations-minded executive in Cook; this time, the board has turned to a product-engineering leader instead.

Cook transformed Apple into a cash-flow king and one of the world's supply-chain titans, but as Ternus inherits the iPhone maker from the legendary CEO, the company is grappling with questions about its artificial intelligence strategy amid competition from hot upstarts like OpenAI. At the same time, a memory chip shortage threatens to squeeze its margins, revenue growth is slowing, and even longtime Apple fans concede that the maker of aspirational tech has lost some of its product design magic.

Although Apple accounts for roughly one in five smartphones shipped worldwide, it has been a while since the company truly surprised consumers. Recent launch events have largely settled into a predictable cadence of incremental camera upgrades and routine spec bumps. There have been notable misfires as well, including the Vision Pro headset and updates to the Siri voice-activated assistant. Major software overhauls, such as the polarizing Liquid Glass iOS redesign, drew sharp criticism over legibility and performance. Meanwhile, Apple's long-rumored foldable phone will arrive years after competitors like Samsung defined the category.

The stakes are even higher now, in many ways, because every tech company that matters in Silicon Valley is racing to build out new form factors designed specifically for the AI era. That poses a massive risk for Apple, which has been behind the curve in popular product categories such as AI-enabled glasses. Rivals like Meta and Google have already shipped smart glasses with AI assistant features, while OpenAI and hardware partner Jony Ive's io venture are working on dedicated AI devices — a landscape in which Apple has yet to announce a competing new form factor.

Apple's role in the private markets has been somewhat muted in the AI era. Far from being a cutting-edge AI leader, the company has been a sometime acquirer — in January, Apple announced its almost $2 billion acquisition of audio AI startup Q.ai, its second-largest deal ever. That stands in contrast to rivals such as Microsoft and Google's parent Alphabet, which have committed tens of billions of dollars to AI infrastructure and model developers over the same period.

A massive shift might be coming under Ternus's leadership. As Herrera writes, some Apple analysts told Fortune that Ternus's product background is exactly the kind of expertise Apple needs at this moment.

Ternus "has the opportunity to be more prescriptive about device design and about preferences around [the user interface]," said Bank of America analyst Wamsi Mohan. Mohan wrote in a recent note that Apple's move away from a net-cash-neutral financial strategy indicated it could devote more investment toward research and development, capital expenditures, and acquisitions — spending that may be required for Apple to keep pace in the AI era.

Right after Labor Day, on Sept. 9, Ternus will appear at Apple's big product event, and a new era will begin. That event will offer the first public look at how Ternus intends to position Apple's hardware roadmap — and how forcefully the company responds to the AI competition reshaping the industry. In the meantime, read Sebastian's whole story here.

In case you missed it: Oura, maker of the ubiquitous smart ring, yesterday officially filed to go public on the Nasdaq. The company's VC backers include Iconiq and Gradient Ventures. A video story on Oura, Tonal, and the future of AI in health and fitness, hosted by Allie Garfinkle, is available here.

Allie Garfinkle can be reached on X at @agarfinks or by email at alexandra.garfinkle@fortune.com. Joey Abrams curated the deals section of the newsletter. This story was originally featured on Fortune.com.