((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto)) by Stephen Nellis
For most of the past year and a half, Apple AAPL.O CEO Tim Cook has fielded questions from Wall Street analysts about his plans for artificial intelligence, while complaining that the maker of the iPhone had no story to tell about AI.
After the company released its quarterly results on Thursday, Tim Cook insisted that Apple would have concrete details to communicate about its artificial intelligence plans very soon.
“We continue to be very optimistic about our opportunity in generative AI and we are making significant investments,” Cook said in an interview with Reuters, noting that the company has spent $100 billion dollars over the past five years for research and development.
Apple’s big tech rivals have spent comparable or even greater amounts on R&D over the same period, but they have also invested heavily in building data centers to house AI services.
Microsoft MSFT.O shelled out $14 billion last quarter in capital spending, Google
Alphabet’s GOOGL.O isn’t far behind at $12 billion. Last week, Meta Platforms
META.O told its investors it plans up to $40 billion in capital spending this year.
Apple thinks differently. Its capital expenditures for the whole of 2023 amount to just over $10 billion.
Apple, which makes most of its revenue selling consumer devices, has paid the price for that position for most of the year, with its shares falling 10% as investors fear the company don’t fall behind in the AI race. Shares of Meta, Google and Microsoft MSFT.O – all of which make money selling software or advertising services – have all hit record highs as the companies strive to dominate the emerging AI landscape , although investors have also balked at soaring prices for data centers and specialized processors needed to train AI models.
Apple suggested Thursday that it would not follow the same path. With Apple expected to unveil new AI features at its annual software conference next month and revamp its product lines with AI-ready chips, Chief Financial Officer Luca Maestri said investors in Apple shouldn’t have expected a radical change in the way the company manages capital spending.
Responding to an analyst’s question, Mr. Maestri recalled the company’s long-standing practice of sharing the cost of manufacturing tools with its suppliers, which allowed Apple to keep its costs low and its cash generation at a high level for over a decade.
“We do the same thing for data centers,” Mr. Maestri said. “We have our own data center capacity, and then we use third-party capacity. This is a model that has always worked well for us, and we plan to continue this in the future
This might be just as good for Apple, as it’s unclear whether AI features like chatbots running directly on a device will drive users to buy new phones, tablets or laptops, which remain the primary Source of Apple’s revenues and profits.
Creative Strategies’ Ben Bajarin said that while better processors could serve as a “line in the sand” for some users who need AI tools for professional use, those features might not spark a sales boom .
“This is something that will help increase sales, but I don’t expect it to be a super cycle,” Mr. Bajarin said. “We must be careful to temper expectations
