Apple Inc. (NASDAQ:AAPL) CEO Tim Cook revealed that the company has invested $100 billion in research and development over the past five years. This investment is part of Apple's plan to unveil new AI features at its annual Worldwide Developers Conference (WWDC) next month.
What Happened: Cook's announcement came after Apple reported its quarterly earnings on Thursday, Reuters reported. Despite concerns from investors about Apple's position in the AI race, Cook expressed confidence in the company's AI prospects.
"We continue to feel very bullish about our opportunity in generative AI and we're making significant investments," Cook told Reuters. He also hinted at an upcoming AI strategy, stating that Apple will soon have concrete details to share.
While Apple's Big Tech competitors have been heavily investing in data centers to host AI services, Apple has taken a different approach. The company's capital expenditure for 2023 was just over $10 billion, significantly lower than its rivals.
For context, Alphabet Inc.'s Google reported capital expenditure of $12 billion in Q1 2024, while Microsoft Corp. and OpenAI are reportedly planning a $100 billion supercomputer.
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Investors in Apple should not anticipate significant changes in the company's approach to capital expenditures, according to CFO Luca Maestri.
"We do something similar on the data center side," Maestri said. "We have our own data center capacity, and then we use capacity from third parties. It's a model that has worked well for us historically, and we plan to continue along the same lines going forward."
Apple's stock has faced some turbulence this year, with a 10% drop in share value. However, the company announced a record share buyback program on Thursday, alongside a smaller-than-expected drop in revenue.
Why It Matters: Despite the challenges, Apple has been making strategic moves to maintain its position in the tech industry. The company's massive stock buyback program and increased dividends have impressed investors, leading to a significant rise in its stock value.
Apple's strong second-quarter earnings and the announcement of a $110 billion stock buyback program have also contributed to a positive outlook for the company. The upcoming AI developments could further bolster Apple's position in the market.
However, Cook acknowledged the challenges faced by the company in China, describing it as "the most competitive market in the world." The drop in demand in China and fierce competition from Huawei Technologies led to a decrease in Apple's revenue, particularly in iPhone sales.
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