Apple is ramping up AI investments but staying cautious on acquisitions and iPhone threats.
On its Q3 earnings call, CEO Tim Cook confirmed the company is going to “significantly” increase spending on AI. Apple has picked up around seven companies this year, mostly small, and is open to buying firms of any size to accelerate its AI roadmap.
Cook said: 
“We’re very open to M&A that accelerates our roadmap.
We are are not stuck on a certain size company, although the ones that we have acquired thus far this year are small in nature.”
Apple reported $3.46 billion in capital expenditures in Q2, up from $2.15 billion last year, but that’s still small compared to rivals like Google ($85B projected for 2025), Meta ($72B), and Microsoft ($30B this quarter).
Cook added:
“We are significantly growing our investment. We did during the June quarter. We will again in the September quarter.”
Apple is reallocating staff to focus on AI features and investing in servers using its own chips, dubbed Private Cloud Compute. CFO Kevan Parekh flagged a “hybrid” capex model, using partners to access infrastructure without owning it outright.
Cook pushed back on AI devices replacing the iPhone, calling future AI gadgets likely complementary, not substitutes:
“It’s difficult to see a world where iPhone’s not living in it.
That doesn’t mean that we are not thinking about other things as well, but I think that that the devices are likely to be complementary devices, not substitution.”
The exec emphasized Apple’s AI approach focused on privacy and integration:
“Our focus, from an AI point of view, is on putting AI features across the platform that are deeply personal, private and seamlessly integrated.”
Cook declined to detail if large language models will become commoditized, saying some strategy remains confidential. He described AI as one of the “most profound technologies of our lifetime” that will impact all Apple devices.
Watch Cook discuss $800M in tariff costs in Q2 below:
