Tim Prepare dinner arrives for the annual Allen and Co. Solar Valley Media and Know-how Convention on the Solar Valley Resort in Solar Valley, Idaho, on July 8, 2025.
David Grogan | CNBC
Apple’s AI technique and funding was on the thoughts of analysts on an earnings name after the corporate reported third-quarter earnings that confirmed overall revenue grew by 10% 12 months over 12 months.
Whereas Apple was by no means going to announce main acquisitions or initiatives on an earnings name, CEO Tim Prepare dinner’s remarks on Thursday verify that the corporate goes to speculate extra closely within the know-how.
Prepare dinner mentioned Apple goes to “considerably” develop the corporate’s investments in AI. He added that Apple was at all times trying to purchase corporations of any measurement that might assist it develop its AI choices.
“We’re very open to M&A that accelerates our roadmap,” Prepare dinner mentioned. “We’re should not caught on a sure measurement firm, though those that we’ve got acquired up to now this 12 months are small in nature.”
Prepare dinner mentioned that Apple had acquired “round” seven corporations to date this 12 months, though not all of them had been targeted on AI. Whereas Prepare dinner has mentioned previously that Apple is at all times evaluating potential acquisitions of all sizes, its largest buy of all time was Beats Electronics in 2014 for $3 billion.
He made the remarks Thursday as Apple has confronted rising pressure from Wall Road to catch as much as its Silicon Valley friends, all of whom have devoted tens of billions of {dollars} towards the infrastructure essential to energy AI.
Apple has by no means been the largest spender on capital expenditures amongst massive tech corporations. It solely reported $3.46 billion in capital expenditures within the June quarter, up from $2.15 billion within the 12 months in the past interval. Its bills this previous quarter are the best they’ve been for the reason that quarter ending December 2022. If Apple spent as a lot because it did this quarter for a full 12 months, that might be about $14 billion yearly.
That hardly compares to Google projecting $85 billion in capital expenditures for its fiscal 2025 final week, Meta’s estimate of as a lot as $72 billion in annual capital expenditure spending, and Microsoft’s $30 billion capital expenditures guide for the present quarter.
Spending extra
“We’re considerably rising our funding. We did through the June quarter. We are going to once more within the September quarter,” Prepare dinner mentioned.
He added that Apple was rearranging workers internally to focus extra on AI.
“We’re additionally reallocating a good variety of folks to deal with on AI options inside the firm,” Prepare dinner mentioned. “We’ve a terrific workforce, and we’re placing all of our vitality behind it.”
To be clear, Google and Microsoft run cloud companies that lease out AI {hardware}, which Apple would not. And Apple finance chief Kevan Parekh mentioned the corporate has a “hybrid” mannequin to capital investments, wherein it positive factors entry to programs it wants via companions and information them as working bills.
Apple additionally mentioned that a few of its capex pays for servers utilizing its personal chips, which it calls Non-public Cloud Compute — not service provider chips from corporations resembling Nvidia.
“I’d say a good portion of the driving force of development that you simply’re seeing now could be actually pushed by a few of our AI associated investments,” Parekh mentioned.
Prepare dinner additionally downplayed any potential that AI-powered gadgets that have not been invented but may threaten Apple’s iPhone franchise. Apple’s former design guru Jony Ive teamed up with OpenAI in a $6.5 billion Might deal, though they’ve but to disclose what their product is, does or will price.
“It is tough to see a world the place iPhone’s not residing in it,” Prepare dinner mentioned, “That does not imply that we aren’t occupied with different issues as properly, however I feel that that the gadgets are prone to be complementary gadgets, not substitution.”
Prepare dinner additionally made it clear to traders and analysts on the decision that Apple does have an AI technique that it is executing on.
“Our focus, from an AI viewpoint, is on placing AI options throughout the platform which are deeply private, non-public and seamlessly built-in,” Prepare dinner mentioned.
When requested if he thought that if giant language fashions — the core AI know-how made by corporations resembling Anthropic and OpenAI — is perhaps commoditized, Prepare dinner declined to reply and mentioned he was protecting some components of the corporate’s technique secret for now.
“The best way that we have a look at AI is that it is one of the crucial profound applied sciences of our lifetime” Prepare dinner mentioned. “It’ll have an effect on all gadgets in a big method.”
WATCH: Apple CEO Tim Cook: Incurred $800 million in tariff-related costs in June quarter
