Apple's AI strategy bets on restraint while Big Tech burns $700 billion on infrastructure

While big tech burns cash on AI, Apple waits | Fortune

Google will spend approximately $90 billion on AI infrastructure this year. Meta has committed $65 billion. Microsoft, Amazon, and Alphabet are collectively spending over $300 billion. Apple, meanwhile, is spending just $12.7 billion on capital expenditure for the entire fiscal year. The conventional narrative is that Apple is losing the AI race. But what if Apple has decided not to run in that race at all? The evidence for Apple's apparent failure is easy to assemble. Siri remains a punchline. The promised AI-powered assistant has been delayed until 2026. Analysts have called the company's AI strategy a "disaster" and warned it is one to two years behind competitors. Meanwhile, Apple sits on more than $130 billion in cash, watching others burn through capital at unprecedented rates. But consider an alternative reading. The foundation model market is beginning to exhibit classic signs of commoditisation. When one company introduces agentic capabilities, the others follow within months. Benchmark leadership changes constantly, with no provider establishing a durable lead. Prices are collapsing: Anthropic recently cut prices by 67%, Google has slashed rates by 70%-80%, and OpenAI has repeatedly reduced costs on successive models. This is textbook commodity market behaviour. If foundation models are heading toward commodity status, then the strategic value shifts to whoever controls the integration layer and the user relationship. Apple has 2.4 billion active devices. It has the most valuable distribution channel in technology. And its recent moves suggest a deliberate strategy: rather than building frontier models, source them from whoever is best at any given moment. This is precisely what Apple has done. It partnered with OpenAI in 2024, then switched to Google's Gemini to power the next generation of Siri. The company is not building the engine; it is curating the best available engine at any given moment, wrapping it in Apple's privacy architecture, and integrating it across the ecosystem. Own the experience, outsource the commodity. This pattern will be familiar to anyone who has watched Apple before. Portable MP3 players existed since 1998 -- three years before the iPod. Samsung and Sony had smartwatches years before Apple entered in 2015. Bragi shipped true wireless earbuds in 2014, two years before AirPods. BlackBerry, Palm, and Nokia dominated smartphones before the iPhone redefined the category in 2007. In each case, Apple let others absorb the costs of pioneering, watched what worked, and entered with superior integration. The pattern suggests a company that views first-mover advantage as overrated and timing discipline as underrated. Apple's opportunity in AI is almost certainly not to build a better chatbot. ChatGPT, Claude, and Gemini are products designed around the model itself -- you visit a website, you converse with the AI. Apple has never been interested in selling technology for its own sake. The company sells experiences that happen to be powered by technology. Its natural move is to make AI invisible: embedded across Siri, HomeKit, Apple TV, AirPods, Watch, CarPlay, Photos, and Mail. The chatbot-centric companies are building products where AI is the destination. Apple's model would make AI the infrastructure -- present everywhere, visible nowhere. There is also a privacy dimension. Apple's on-device processing and Private Cloud Compute architecture allow it to offer AI features without harvesting user data in the way that cloud-centric competitors must. As consumers grow more wary of AI systems trained on their personal information, this could become a meaningful differentiator -- one that Google and OpenAI cannot easily replicate given their business models. The risk, of course, is that AI does not commoditise. If network effects, proprietary data, or compounding capability advantages create durable moats at the model layer, Apple could find itself permanently dependent on suppliers who control the most strategic technology of the era. This is a genuine possibility that the company's leadership must be weighing. But Apple's financial position gives it options. If the current AI capital cycle cools -- and capital cycles do cool -- talent becomes available, startup valuations compress, and infrastructure costs normalise. With record revenue of $416 billion, iPhone demand that Tim Cook called "simply staggering", and annual profits approaching $100 billion, Apple is positioned to move decisively as a buyer rather than competing in a seller's market driven by hype. The spending gap between Apple and its competitors is real. Whether it represents a failure of vision or an exercise of it will depend on a question no one can yet answer with certainty: will AI models become interchangeable commodities, or will they remain a source of durable competitive advantage? Apple appears to be betting on the former. If it is right, today's restraint will look like foresight. And the company will do what it has done before -- enter late, integrate brilliantly, and win.

How Apple's Contrarian 'Nah, We're Good' Strategy Defies Amazon, Microsoft, Alphabet - Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN)

Apple Inc. (NASDAQ:AAPL) is the odd one out in Big Tech's AI spending race. While the rest of the Magnificent 7 are collectively committing around $700 billion in capital expenditure (capex) over the next year, Apple cut its own spending 19% year-over-year last quarter to $2.37 billion. The chart, published by A16Z, captures the gap visually. Since 2014, Apple's quarterly capex line has barely moved. Every other Big Tech line has turned parabolic. The Rest Of The Mag 7 Is Going All In Most of the increased spend is going toward AI data centers, chips, and infrastructure, and a good portion of that money flows directly to Nvidia (NASDAQ:NVDA) Apple's full-year spend was $12.72 billion. That is less than Amazon plans to spend in a single quarter. The Market Is Starting To Question The Spending Bigger is not necessarily better. When Amazon announced its $200 billion capex guidance, its stock dropped about 8% in the following session. Alphabet's similarly aggressive plans sent its stock down roughly 6%. Investors are getting nervous about whether these companies will ever see a return on the unprecedented investment. CEO Tim Cook has defended Apples approach directly. "From a CapEx point of view, we've always taken a very prudent and deliberate approach to our expenditure and we continue to leverage a hybrid model, which I think continues to serve us well," he forecasted on Apple's Q1 2025 earnings call. Apple is relying on on-device processing and "private cloud compute" to avoid the massive server costs burdening its rivals. What Polymarket Says Prediction markets may offer the clearest read yet on who investors actually think wins this bet long-term, and they appear skeptical Apple's restraint pays off over the longer arc. On Polymarket's "Largest Company End Of December 2026?" market, which has over $626,000 in volume, Nvidia leads at 44 cents, Alphabet sits at 33 cents, and Apple is at just 14 cents. Despite persistent speculation about his successor, traders on Polymarket give Tim Cook a 69% chance of remaining CEO through 2027, suggesting a reversal in strategy is unlikely. The crowd is pricing in that the companies spending most aggressively on AI infrastructure are the ones most likely to be running the world's highest valuation by year end. Apple's "nah, we're good" approach to capex may be the right call for free cash flow. Whether it's the right call for competitive positioning in AI remains to be seen. Image: Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.