For most of the past year and a half, Apple CEO Tim Cook has received many questions from Wall Street analysts about his artificial intelligence (AI) plans.
After the company reported its quarterly earnings on May 2, CEO Tim Cook confirmed that Apple will soon talk specifically about its AI plans. “We continue to feel very optimistic about our opportunities in generative AI and are making significant investments,” he told the news agency Reuters in an interview, noting the company has spent $100 billion over the past five years on research and development (R&D).
Apple’s Big Tech rivals spent similar or even greater amounts on R&D over the same period, but they also spent a lot to build data centers that host AI services. For example, in the most recent quarter, Microsoft spent 14 billion USD, and Alphabet’s Google spent 12 billion USD. Meta Platforms plans to spend up to $40 billion in capital expenditures this year.
Apple thinks differently. Capital spending for the whole of 2023 is just over $10 billion.
Apple CEO Tim Cook at the Wonderlust event in September 2023. Photo: Reuters
Apple, which makes most of its money from selling consumer devices, paid the price for this steadfast stance with its shares falling 10% as investors worried the company was falling behind in the race. WHO. Meanwhile, shares of Meta, Google and Microsoft – all of which make money from selling software or advertising services – soared to record highs.
Apple suggests it won’t take the same tactic. While it’s expected to announce new AI features at WWDC in June and overhaul its product lines with AI-ready chips, Chief Financial Officer Luca Maestri said Apple investors shouldn’t expect a big change. major changes in the way companies handle capital expenditures.
Responding to an analyst’s question, Maestri noted the company’s long-standing practice of sharing the cost of manufacturing tools with suppliers, which has kept Apple’s costs low and stockpiled. cash for more than a decade.
“We do the same thing with data centers,” Maestri said. “We have our own data center capacity and also use capacity from third parties. It’s a model that has worked for us and we intend to continue in the future.”
According to Reuters, this may also be good for Apple because it is unclear whether AI features such as chatbots running directly on devices will motivate users to buy new phones, tablets or laptops. Creative Strategies analyst Ben Bajarin said those features may not trigger a sales boom.
“That will be something that lifts sales, but I don’t expect it to be a super cycle,” Bajarin said. “You need to be careful to temper your expectations.”
(Theo Reuters)
