Apple the outlier: iPhone-maker is betting on AI by not spending on it, will it win?

Unlike other tech companies, Apple is not part of the AI-hype cycle. At least not in terms of committing dollars to it. Yet, its strategy — while carrying a risk — may end up helping it ace the AI race.

In Short

• Rival tech giants may spend $700 billion on AI in 2026
• Apple's 2026 capital expenditure is projected at just over $14 billion
• Apple's Gemini partnership aims to power Apple Intelligence and a smarter Siri

Data is the best way to tell a story. In this case, data is clear. Of all big tech companies, Apple is the only one that is not part of the current AI hype cycle. It is reflected in the dollars the company is spending, or rather not spending, on AI. So big is the gap in capex — short for capital expenditure — between Apple and, say, Google that it begs the question: what is going on? This story is an attempt to answer this question because increasingly it is looking like that Apple is not being stupid by not getting on the AI hype train. Instead, it is, probably, being the smarter one.

First the data. 2026 is the year when money is flowing into the AI hype. To build AI, Microsoft, Amazon, Alphabet, and Meta are on track to spend a whopping $635 billion to $700 billion collectively this year. Most of this capital is earmarked for data centres and GPU clusters required to train and host Large Language Models (LLMs).

Any tech company that wants to win future, wants to own AI world. The sentiment is so strong no one wants to be cautious. Mark Zuckerberg captured it well when he said a few months ago, “If we end up misspending a couple of hundred billion dollars, I think that that is going to be very unfortunate obviously. But what I’d say is I actually think the risk is higher (if we don’t spend money).

Yet, one company is missing from this race for the future. Apple is not part of it. In contrast to other tech giants, Apple is saying, “Nah, we’re good.” Its capex budget for the entirety of 2026 is projected at just over $14 billion, which is less than 10 percent of what its peers are spending.

Apple makes a different kind of AI play

What explains it? The nature of Apple does. Unlike other tech companies, which are all services, software and data companies, Apple is a hardware company. Experts and analysts slam its inability to create a smarter Siri, but a dumb Siri has not stopped Apple from selling a truckload of iPhones and Mac. It is this product focus that explains Apple’s reluctance to bet the farm on AI.

Apple has always innovated on hardware and rarely on software. Even when it has innovated on software, such as digital music playback, it has mostly worked to improve something instead of reinventing the wheel. Or as Apple CEO Tim Cook says, “It doesn’t bother us that we are second, third, fourth or fifth if we still have the best (experience).” For example, when Apple launched the iPod, it didn’t reinvent digital music playback. It only ensured that the iPod would give the best digital music experience. The same strategy seems to be at play with Apple’s relationship with AI.

Instead of making big-ticket $100 billion investments in AI, Apple is letting others do the experiment. Its focus remains devices and hardware because AI software, it believes, would be commodified like always.

OpenAI CEO Sam Altman, who is spending billions of dollars at the moment on AI, believes in the future AI will become a utility like electricity. Everyone will buy AI, specifically AI models and intelligence, from companies like OpenAI. Eventually, it would become “too cheap to meter.” The same sentiments have been shared by Microsoft CEO Satya Nadella. On a tour to India in late 2025, he stressed that AI models were rapidly becoming commoditised.

Apple is seeing AI not as an exclusive technology where winners take it all, but as a service that will be available to anyone who can pay for it. It is like that debate about houses that sparks on social media every few days. Should you rent, or should you own? The tech companies that are spending $100 billion on AI want to own the proverbial house. Apple, meanwhile, is already moving to rent it.

We saw this in January this year when Google, which makes Gemini AI, and Apple announced a major partnership. “Apple and Google have entered into a multi-year collaboration under which the next generation of Apple Foundation Models will be based on Google's Gemini models and cloud technology,” the two companies said in a brief statement. “These models will help power future Apple Intelligence features, including a more personalised Siri coming this year.”

Instead of fixing the stupid Siri by investing 100s of billions of dollars, Apple is simply licensing an already proven AI system from Google.

Currently, we do not know who is paying whom in this deal. But that’s the interesting part. Apple and Google also have a deal on search engines where Google PAYS Apple almost $20 billion every year to be the default option on the iPhone. It is possible that given Apple’s reach among consumers, it may end up getting paid for using someone’s AI system — which might then serve users ads or collect data — instead of investing in AI.

This is the second component of Apple’s AI story so far — its devices. Or Apple hardware. Instead of creating a smart LLM like Gemini or Anthropic Claude, Apple is hoping to make its iPhone and Mac AI-ready.

The company has made a decade-long investment in custom silicon. Since 2017, all iPhone processors have a dedicated Neural Engine that is solely tuned for AI-related work. Similarly, the M chips since they arrived in 2019, have carried a similar Neural Engine. In recent years, Apple has dedicated more and more chip resources on Neural Engine in its devices.

For example, recently when Apple launched M5, it highlighted that the new chip delivers “over 4x peak GPU compute compared to M4, and over 6x peak GPU compute for AI performance compared to M1.” The company said laptops and iPads powered by the M5 “benefit from dramatically accelerated processing for AI-driven workflows.”

This is the reason why, earlier this year, when OpenClaw aka ClawdBot burst on the scene and became a rage, Mac mini computers flew off the shelves. Even now, as more people try to experiment with AI agents through local computers, Mac mini has become the go-to machine. Such is its popularity because of its AI performance that the base Mac mini is currently sold out almost everywhere, including in India. And if you choose to buy a more powerful but also more expensive machine, it is available, but the delivery time is running into weeks. For example, if you order a Mac mini today from the Apple India website, you will only get it in the June first week.

The company’s success in consumer devices means that Apple is busy getting its iPhone and Mac ready for whatever new AI system that emerges as winner in the bitter fight between Google, Anthropic, and OpenAI. From Apple’s point of view, Google and OpenAI are making the roads. Apple is bringing the cars.

In the process, it is being cautious about spending money when there is no guarantee of returns. As OpenAI and others spent 100s of billion of dollars, they are also now coming under pressure to deliver on the promise they have made to investors. Mark Zuckerberg is virtually betting his entire company on AI with the kind of money he is spending on AI. OpenAI and Anthropic, if they don’t show results in another couple of years, may even go bust. Same is the predicament of companies like Oracle and Amazon, which are investing to create data centres that would power AI services.

If AI hype, for some reason does not play out as expected, these tech giants may end up losing big time. As much there is hype, there is also scepticism, as noted by former Meta AI boss Yann LeCun. While he sees the utility of something like Claude and ChatGPT, LeCun also believes “we are not going to get to human-level AI by just scaling up LLMs.” In such a scenario, it seems that Apple is being smarter about AI hype. Unlike others, it is not rushing headlong into the AI race. Instead, it is playing the AI game in areas where it is already the apex player.

A risky strategy nonetheless

Now, as much as Apple’s strategy makes sense, it is a risky strategy for sure. It is risky because it is not bold enough. History, after all, is not kind to companies that try to use their dominant present technology to ward of the new future. From Kodak to Nokia, the story has been the same: they thought that their present strength will always keep them safe.

Maybe the rest of the world is right in believing the hype of AI. And Apple is wrong. Maybe AI will reach a point where the intelligence requirement is so massive that it can only live in a $100 billion supercomputer and Apple’s local chips will look like calculators trying to predict the weather.

Or maybe someone will create devices that are AI first and beat Apple by changing the rules of the game. OpenAI and Anthropic may decide to do AI hardware, a phone, for instance. At least one of these companies, OpenAI, is confirmed to be working on a companion gadget with Apple’s former design guru Jony Ive.

In these scenarios, Apple won't just be late to the party, it could end up being locked out of the building. But it will happen when it happens. For now, Apple is playing a different AI game. It is the game where it holds the cards, and it is hoping that its cards are more powerful than the ones held by Google, OpenAI, Anthropic and others. And for now, it seems that Apple has a winning hand even if it is not spending billions of dollars on AI like others.

- Ends