After falling behind in AI technology, Apple is also ready to "spend money" to invest

According to Zhitong Finance APP, Apple (AAPL.US) CEO Tim Cook stated on Thursday that the company is prepared to increase its investment to catch up with competitors in the field of artificial intelligence, either by building more data centers or acquiring larger companies in the sector, which is different from the company's long-standing frugal financial policy.

The iPhone manufacturer has struggled to keep pace with competitors like Microsoft (MSFT.US) and Alphabet's Google (GOOGL.US), both of which have attracted hundreds of millions of users to their AI-driven chatbots and assistants. This growth also reflects a surge in AI investment spending, with Alphabet raising its capital expenditure forecast for 2025 by $10 billion to $85 billion, while Microsoft is expected to invest over $120 billion in the new fiscal year, primarily for data center construction.

Meanwhile, other tech giants are also ramping up their investments in AI. Amazon's capital expenditure reached a record $31.4 billion this quarter, up about 90% from the same period last year; CFO Brian Olsavsky stated that this spending level "roughly represents" the company's planned investments for the second half of the year. Meta (META.US) announced on Wednesday that its capital expenditure for the year will be between $66 billion and $72 billion, an increase from its previous minimum estimate of $64 billion.

In contrast, Apple has relied on external data center providers to handle part of its cloud computing business. Despite a high-profile partnership with OpenAI, the developer of ChatGPT, to support certain iPhone features, Apple is still trying to develop most of its AI technology in-house, including improvements to its Siri virtual assistant.

However, the results have not been ideal. In June, Apple held its annual Worldwide Developers Conference (WWDC), where the company's announcements regarding AI did not satisfy investors, and Apple postponed the release of an AI-enhanced version of its virtual assistant Siri until next year.

During the conference call following Apple's third fiscal quarter earnings announcement, analysts pointed out that Apple has historically not engaged in large-scale transactions and inquired whether it would adopt a different strategy in pursuing AI goals. Cook responded that the company has acquired seven smaller companies this year and is open to acquiring larger ones.

Cook stated, "We are willing to engage in mergers and acquisitions that help advance our development roadmap." Apple had approximately $133 billion in cash reserves at the end of the quarter ending in June.

Apple tends to acquire small companies with highly specialized technical teams to develop specific products. Its largest deal to date was the $3 billion acquisition of Beats Electronics in 2014, followed by a $1 billion acquisition of a modem chip business from Intel (INTC.US) But now Apple is at a unique crossroads in its business development. First, regulators around the world are proposing adjustments to Apple's App Store policies, which could reduce revenue from software and subscription services. Additionally, the U.S. Department of Justice is likely to overturn an agreement with Google that made Google the default search engine on Apple devices—an arrangement that brings Apple about $20 billion in revenue each year.

Meanwhile, startups like Perplexity are negotiating with smartphone manufacturers to replace Google with an AI-driven browser capable of handling many search functions. Apple executives have stated in court that they are considering reshaping the company's Safari browser using AI search capabilities, and there have been reports that Apple executives have discussed acquiring Perplexity.

In addition to partnerships, Apple also faces challenges in the software sector from Alphabet, which is rapidly integrating AI features into its competing Android operating system.

On Thursday, Apple also announced plans to increase investment in data centers. In this area, Apple typically invests only a few billion dollars each year. Currently, Apple is using its own chip designs to handle AI requests, and its privacy controls are compatible with privacy settings on Apple devices.

Apple's Chief Financial Officer Kevin Paler did not provide specific spending targets, but he indicated that total spending would increase.

Paler stated during a conference call, "This will not be exponential growth, but it will indeed achieve significant growth. A large part of this is due to our investment in AI."

Apple's stock price fell 17% in 2025, as investors worried not only about slowing hardware sales but also believed that Apple was lagging behind other tech giants in integrating AI features into its products