Apple's Binary Bet
In 2021, Apple spent $11.1B on CapEx for the year. In 2022, that number fell slightly to $10.7B. In 2023, it was back to $11B. By 2024, it was down a bit to $9.4B. 2025 saw a jump to $12.7B. 2026? Well, with half the fiscal year in the books as Apple just reported their Q2 numbers, Apple is on track to spend... $9B to $10B in CapEx.
One could imagine a banker on Wall Street conjuring Matthew McConaughey in Dazed & Confused: "That's what I love about Apple, man. Their Big Tech peers go crazy on CapEx, Apple keeps the spend the same."
The dichotomy is so wild that it now gets written about every single quarter. But the dichotomy also keeps growing every single quarter as Big Tech keeps ramping CapEx and yes, Apple stays the same! I mean the chart above says it all by showing it all.
In 2021, Apple brought up CapEx quite a bit from $7.3B in 2020 to that $11.1B number – a huge jump, relatively speaking. It looked like they might be closing the gap with their peer group as Meta was at $19.2B that year, Microsoft at $20B, and Google at $24.6B. (Amazon was an outlier back then – $61B! – due to their unique warehouse and data center needs given their core businesses.) But over the next few years, the story remained largely the same, with everyone holding fairly steady (aside from Meta, which ramped CapEx in 2022 – but pulled back the following year). Then 2024 hit.
By then, it was obviously clear to everyone that ChatGPT was not a flash in the pan – well everyone except Apple, perhaps. Acting like the Eye of Sauron realizing the Ring of Power was nearby, the rest of Big Tech firmly fixed their gaze on CapEx. Last year, the numbers exploded. This year, they'll explode even further. Amazon will hit $200B spent for the year. Google will be close behind at $190B. Microsoft should be around the same at $190B. Meta at $145B. Apple? Again, they hit $4.344B in CapEx in the first half of 2026 – which was down a bit year on year – so they should end in that $9B to $10B range, assuming some level of ramp. Yes, that would be below what they spent in 2021.
It's just such a wild break from their peer group. And it keeps getting more wild. It seems like the most binary bet imaginable. Either Apple is right and the rest of Big Tech will have lit hundreds of billions – perhaps trillions when all is said and done – of dollars on fire, or Apple is going to be in big trouble.
Obviously, there will be some nuance there. Apple's bet relies on a few factors, including that someone else is spending this CapEx on which Apple can rely. This is the "hybrid" approach to such spend that Tim Cook and others at Apple keep referring to. They're basically saying that while they'll do some of their AI work in-house, on their own servers, for the most part, they'll partner with the others to rely upon their capacity. Most famously, Apple is now doing this with Google.
To that end, they may view it as similar to their longstanding – even after legal challenges – deal for Google Search. Apple could have spend tens or hundreds of billions building their own search engine. But they opted to partner with Google and instead got paid tens or hundreds of billions! And how well did that spend versus partner strategy work for Microsoft? They're making some money from Bing now, but it took years and years – and billions upon billions spent – to get to this point. And they're hardly making Google "dance" despite Satya Nadella's promises.
So yeah, that would be a best-case-scenario for Apple. The problem is that no one else thinks AI is going to play out the same way – clearly, or they wouldn't be spending these billions! At the very least, they view right now as a greenfield opportunity to own AI in a similar manner to how Google took control of Search. But more likely, they think AI is going to be a core bit of technology that they each need to control, lest they be beholden to someone else. This is exactly why Microsoft shoved OpenAI aside despite their early extremely prescient bet on the startup that remains the leader in the field. Even though Microsoft owns 25%+ of that company, with IP rights and access, they're now spending the billions to build out AI on their own.
What's especially wild there is that Apple is most famously the company that doesn't want to be beholden to anyone else if at all possible. It's the "Tim Cook Doctrine" for chrissakes! Either they've forgotten that fear, which stems from the times Apple nearly died in their history when others refused to play ball with them, and have been lulled to complacency by years of iPhone dominance, or again, they just think this will be like web search. Not something they need to fully own.
Or at least not yet. The other possibility here is that they view this AI arms race as nutty right now because the technology continues to evolve so fast and it's possible that their peers spending their billions just ends with them all more or less on equal footing as the technology stabilizes and perhaps commoditizes. That has not been the case thus far, which is why everyone makes fun of Apple's AI stumbles. But it doesn't mean it won't be the case eventually.
At the same time, Apple can be like the tortoise racing the hares. Slow and steady with their AI work to try to win the race in the end, years down the line, when the technology is finally mature enough to matter for everything. The problem there might be the fact that they won't have the muscle memory from years spend in said AI race. Maybe they can hire/acquire their way to the top then, but it's a massive risk, to say the least.
But it's the one Apple is clearly willing to take! Certainly it's the one Tim Cook has been taking over these past many years. We'll see if John Ternus thinks differently here, but all indications are that he will not deviate from this strategy any time soon. We could very well be in a situation where in 2027, Google and Amazon are spending $300B on CapEx and Apple is spending... around $10B.
One more thing: Apple is ramping up their R&D spend, which you have to believe is also related to AI work, at least tangentially. In fact, those numbers are at all time highs for Apple. Of course, their peers are also ramping such spend too...
M.G. Siegler
M.G. Siegler
M.G. Siegler