The need to increase investments in the development of artificial intelligence forced Apple’s management to admit at the quarterly reporting conference that expenses in this area had already begun to grow in the past quarter, but the financial indicators available to the public allow us to talk about Apple’s relatively modest expenses in this area compared to most competitors.
Image source: Apple
According to CNBClast quarter Apple reported a 3% year-over-year increase in real estate and equipment costs to $2.15 billion, and a sequential increase of 8% quarter-over-quarter. Some of these investments, presumably, had nothing to do with artificial intelligence, but even this absolute amount is enough to claim that Apple’s spending on creating AI infrastructure is quite modest. The company’s management explained that it prefers to adhere to a hybrid approach to building data centers, relying on leasing ready-made capacities from third-party providers.
Microsoft, by comparison, incurred $13.87 billion in capital expenditures last quarter, up 55% year-over-year. Alphabet’s core spending rose 91% to $13.19 billion, while Meta✴ Platforms saw its capital expenditures rise 31% year-on-year to $8.3 billion. The latter’s founder, Mark Zuckerberg, recently justified the increase in core expenses during a speech by citing the higher risk of losing the company’s position in the AI segment compared to the possible financial losses from wasted investments. He sees Apple as a strong competitor, and this time he would not like to allow it to control the bulk of the market while making this important technological transition. If you don’t invest seriously now, as Zuckerberg explained, you could fall behind other market participants for at least 10 or 15 years.
Apple’s reduction in AI development costs is also facilitated by its desire to avoid purchasing and renting expensive Nvidia accelerators. It has recently become more reliant on Google processors. CEO Tim Cook explained at Apple’s quarterly conference that a hybrid approach to AI infrastructure development allows the company to attribute capital expenditures to the budget of cloud service providers. Apple’s partners include Amazon, Google, and Microsoft. The latter finances the development of OpenAI, with which Apple itself cooperates in integrating the ChatGPT chatbot and the Siri voice assistant. Apple representatives declined to discuss the details of the agreement with OpenAI this week, citing its confidentiality. Tim Cook does not rule out that some opportunities for monetization will appear in this area.
If you notice an error, select it with your mouse and press CTRL+ENTER.
