Apple plans to ramp up its spending on artificial intelligence and take a more open approach to acquisitions as it faces mounting pressure from competitors and significant internal challenges.
During Apple’s latest earnings call, CEO Tim Cook announced that the company is investing significantly more in AI. Apple’s CFO Kevan Parekh added that much of the company’s current growth in spending is due to increased investment in AI.
Internally, Apple is shifting staff to AI-focused projects, aiming to integrate AI features across its platforms. The focus, according to the company, is on delivering personal, privacy-focused, and seamless user experiences. For infrastructure, Apple is relying on servers running its own chips under the name “Private Cloud Compute,” rather than hardware from vendors like Nvidia. Unlike Google or Microsoft, Apple doesn’t operate its own cloud infrastructure, instead using a hybrid model with partner solutions that are accounted for as operating expenses.
Apple’s cautious spending, but open to acquisitions
Cook also said Apple is open to acquisitions of any size if they support its AI strategy. So far this year, Apple has acquired around seven companies, mostly smaller firms, not all of which are AI-related. Apple’s largest acquisition to date was its $3 billion purchase of Beats Electronics in 2014.
Despite the increased spending, Apple remains conservative compared to other tech giants. The company invested $3.46 billion in capital expenditures during the June quarter, while Google, Meta, and Microsoft each plan to spend tens of billions. Cook also brushed off concerns that new AI devices could replace the iPhone, describing them as complementary rather than competitive.
Internal struggles and a shift in strategy
Apple’s announcement comes against a backdrop of serious internal issues. Reports point to technical setbacks and dysfunctional management that delayed the rollout of updated Siri features until 2026. Power struggles between John Giannandrea’s AI group and Craig Federighi’s software team reportedly stalled development, leading to a shakeup that put Federighi in charge of Siri. Apple has also struggled with a major shortage of computing power, forcing it to move away from its longstanding strategy of on-device data processing.
These problems triggered a massive talent exodus, with Meta luring away several key AI researchers with multimillion-dollar contracts. As a result, Apple is reportedly considering a major strategic shift, including talks with OpenAI and Anthropic about using their models for Siri. Under Federighi’s leadership, Apple is said to be open to integrating open-source models if they outperform its own efforts. The new investments and more flexible acquisition strategy appear to be Apple’s response to filling both strategic and personnel gaps.
