Apple Defies Big Tech Trend on AI Spending

Apple's latest earnings report shows that it is bucking the trend of Big Tech companies investing heavily in AI infrastructure. While Microsoft, Alphabet, Meta, and Amazon are pouring hundreds of billions of dollars into chips, data centers, and power infrastructure, Apple is taking a different route.

The company's revenue jumped 16% to $109.4 billion in the June quarter, with iPhone sales rebounding by 22% and Mac sales growing by 29%. Earnings per share rose 29% to $2.02, beating Wall Street's forecast.

However, Apple's margins are facing a squeeze due to higher memory costs. The company guided to a gross margin of 47-48%, which includes a one-point benefit from tariff refunds. Without this boost, the midpoint falls to around 46.5%. Management attributed most of the decline in margins to increased memory costs.

Apple's research and development spending jumped 32% to $11.7 billion, but the company is relying on a mix of on-device processing, its own servers, and third-party cloud capacity rather than building a vast public-cloud network like its rivals. CEO Tim Cook acknowledged that Siri AI could eventually make Apple more capital-intensive.