2 months ago
- Apple avoided massive spending on AI infrastructure unlike its rivals (Amazon, Google, Microsoft, Meta), which collectively spent $650 billion.
- Apple's capital budget remains modest at $14 billion, focusing on hardware tooling cycles rather than AI data centers.
- Hyperscalers (Amazon, Google, etc.) are now spending 94% of their operating cash flows on AI infrastructure, leading to negative free cash flows and increased debt.
- AI services currently generate only $35 billion in revenue, a small fraction of the infrastructure spending, with unclear business models for consumers.
- Apple licensed Google’s Gemini for AI capabilities instead of building its own model, saving billions and maintaining flexibility.
- Apple’s M5 chip enables local AI processing on devices, eliminating the need for expensive data centers.
- Apple leverages its 2 billion devices as a distributed AI network, a strategy unmatched by server farms.
- Apple conducted $90.7 billion in stock buybacks, while competitors reduced buybacks by 74% from their peak.
- Apple’s strategy focuses on owning the customer rather than the infrastructure, positioning it uniquely in the AI revolution.