Apple’s Massive AI Investment To Take On Tech Giants in 2024

Apple’s Massive AI Investment To Take On Tech Giants in 2024

News by Vianca Meyer
Published: October 24, 2023

As the generative AI landscape flourishes, Apple finds itself trailing competitors like Meta, Microsoft, and Google. Recent reports indicate that Apple may be gearing up to throw billions into the race, attempting to gain a stronger foothold in this emerging tech sector. 

Apple's Hefty $4.75B Investment in AI

Apple is expected to direct significant capital towards the development and expansion of its generative AI capabilities in the coming years. 

The Cupertino-based tech giant is projected to invest $620 million in 2023, with expenditures predicted to soar to a staggering $4.75 billion by 2024. 

While some of these funds are earmarked for the procurement of state-of-the-art AI servers, like Nvidia's HGX H100 8-GPU — a platform tailored for generative AI training — the company's plans don't stop there. Future server acquisitions may even transition to Nvidia's next-gen B100 solution if speculations hold. 

Despite this considerable investment, Apple's purchasing strategy lags behind competitors.

For instance, Meta is set to purchase approximately 40,000 AI servers in 2024, dwarfing Apple's estimated 20,000 unit acquisition. To further illustrate the disparity, Microsoft's AI server purchases in 2024 are projected to be around 80,000–100,000 units. 

To contextualize this investment, Apple's current AI applications in products primarily revolve around improving photo quality and text autocorrection.

But as reports suggest, more substantial consumer-facing AI offerings, akin to OpenAI's ChatGPT or Google Bard, are yet to emerge from Apple's innovation hub. Bloomberg even dubs the lack of generative AI offerings as a "pretty big miss internally." 

For a company that boasted cash and cash equivalents nearing $29 billion in its most recent quarter, these billion-dollar figures for AI might seem trifling.

Yet, when compared to ongoing projects and the competition's AI strides, Apple's proposed budget might not be as lavish as it first appears. 

While Apple has made modest forays into AI with its Ajax LLM framework and the internally known "Apple GPT" chatbot, further advancements are crucial to maintaining its competitive edge.

These investments also reflect a broader tech trend where companies are diverting significant funds towards generative AI development, signaling its growing importance in shaping the future of tech. 

The Road Ahead for Apple

Under the guidance of Apple executives like John Giannandrea and Craig Federighi, the company's AI roadmap seeks integration into popular applications such as Siri, Messages, and Apple Music. Plans may also extend to aiding app developers through AI in Xcode. 

However, with supply chain challenges, especially concerning the availability of Nvidia AI chips, and competition from tech behemoths, Apple's journey in the generative AI arena is fraught with challenges. 

Ming-Chi Kuo of TF International Securities articulated concerns about Apple's potential underinvestment in this sphere, especially when juxtaposed against competitors' heavy AI spending. Kuo stressed the vital need for Apple to invest several billion dollars annually to ensure a viable competitive stance in the generative AI market. 

While Apple's financial commitment to AI is evident, only time will tell if these investments will bear fruit in the evolving tech landscape.

Edited by Nikola Djuric

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