As many major technology companies race to build massive data centers for their artificial intelligence ambitions, apple We’re taking a more modest approach.
Rather than simply buying as many AI chips as possible, Apple is buying computing power from external partners, finance chief Kevan Parekh explained Thursday during the company’s fourth-quarter earnings call.
When Apple builds servers for its AI software, it uses its own chips, rather than those from Nvidia or AMD, to power a service called private cloud computing.
“I don’t think we’ll move away from this hybrid model of leveraging both our own capacity and third-party capacity,” Parekh said.
Thursday’s Apple results capped a busy week for the tech industry. alphabet, microsoftand Meta It was reported on Wednesday that Amazon It was reported on Thursday.
The companies said they plan to increase spending on capital expenditures to secure the computing power needed to develop next-generation AI and provide services to users.
Alphabet said it expects to spend about $92 billion in capital spending this year. Microsoft spent about $34.9 billion on capital expenditures in the September quarter and said it would make more capital expenditures in fiscal 2026 than a year ago.
Meta shares plunged after CEO Mark Zuckerberg defended the company’s plan to spend about $71 billion on AI chips and other costs in 2025. On Thursday, Amazon increased its 2025 spending forecast by 6% to $125 billion.
Compared to them, Apple spends very little.
In fiscal 2025, which ended in September, Apple spent $12.72 billion on capital expenditures.
Still, this is a 35% increase compared to last year’s spending, which is a significant increase. Parekh said Apple expects further increases. Analysts expect Apple’s capital spending to rise to $14.3 billion this year, according to FactSet.
“In 2025, we had capital investment costs associated with building a private cloud computing environment in our own data centers,” Parekh said. Earlier this month, Apple announced it would begin shipping these servers from its Houston factory.
Last year, the company released Apple Intelligence, a suite of AI tools that runs on its chips and can summarize notifications, generate new emojis and other images, and pass complex queries to OpenAI’s ChatGPT.
Apple Intelligence has received mixed reviews from critics, and improvements to one of its highlights, the Siri assistant, were delayed by the company in May until 2026. An improved Siri will be available next year, Apple announced Thursday.
But if Apple’s decision to take a different approach to AI will jeopardize its hardware sales, that hasn’t happened yet.
Apple CEO Tim Cook told CNBC’s Steve Kobach that consumer response to the company’s iPhone 17 models has been “unexpected” and that the company’s overall sales for the December quarter will increase 10% to 12%. Apple executives spoke passionately about the popularity of the new iPhone in a call with analysts.
Still, Apple executives acknowledge that AI features like Apple Intelligence are a factor in smartphone purchasing decisions.
“We’re very bullish that it’s going to be a bigger factor,” Cook said.
Apple’s “hybrid” approach means that some of the money the company spends on AI computing becomes an operating expense rather than a capital expense. Analysts pressed Apple executives, saying the company’s operating expenses rose 11% over the past year to $15.91 billion.
“As we increase our investments in AI, we also continue to invest in our product roadmap,” Parekh said. “The majority of the increase in operating expenses was due to research and development.”
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