Syed Imran Haider 
On Thursday, Apple Inc. had its quarterly earnings call. The topic that was the focus of analysts was a product that is currently not available in the market; Apple Intelligence.
Apple’s forthcoming intelligence system is expected to trigger a fresh cycle of upgrades amongst iPhone users. This would boost the hardware sales of the company.
The Questions
In the analyst call, a number of questions focused on this topic during the Q&A session. Analysts asked about the pace of the rollout and about the deal between Apple and OpenAI for integrating ChatGPT.
Analysts also asked whether the iPhone giant had already seen a sales boost due to the service. However, Time Cook, the CEO, and Luca Maestri, the CFO, mostly dodged the questions.
One question that the chief executive chose to partially address was regarding Apple’s spending on AI servers. This issue has become a popular topic these days given the tech earnings season.
It is because investors are trying to gauge how far the companies have progressed in terms of AI infrastructure buildouts and what to expect in the future.
During the call, Cook acknowledged that their AI spending had gone up. He said that there was a year-over year rise in the spending, as evident in the results for the quarter.
This spending increase was due to Apple Intelligence as well as AI.
The Spending
In the quarter ending in June, the payments that Apple made for property, plant and equipment stood at $1.5 million.
This marked an increase of 8% quarter-over-quarter and was a rise of 3% from the same quarter in the previous year.
However, it should be noted that not all of these investments are for AI, as some of them are aimed at other operations as well.
Most importantly, while the company’s capital expenditure has certainly gone up, it is nowhere close to its mega-cap peers.
These include Meta, Google and Microsoft. These firms are spending massive sums on AI-focused data centers that use chips from Nvidia.
The Competitors
For instance, the capital expenditures of Microsoft for the June quarter stood at $13.87 billion. This points towards a 55% year-over-year increase.
There was a 91% jump in Alphabet’s expenses, as they climbed to $13.9 billion. As for Meta, it saw a 31% rise in its its capital expenditure, which pushed it up to $8.3 billion.
Mark Zuckerberg, the CEO of Meta, used game theory terms to explain the rise in spending.
He said that there was greater risk of missing out on the generative AI boom instead of the disadvantage of spending on AI.
Moreover, the chief executive said that he does not want the next technological shift to be under the control of Apple, if it does eventually turn out to be AI.
He added that companies investing in AI were making a rational decision, or else they could be left behind.
However, Apple is not operating along the same lines. It does not have its own cloud business like Microsoft, Google and Amazon.
Apple also revealed that rather than using Nvidia chips, it had rented cheaper Google TPUs for training its Apple Intelligence models.
