Horace Dediu on Apple Sitting Out the AI Spending Race

Horace Dediu, under the headline “The Most Brilliant Move in Corporate History?”:

Apple used to be the biggest capex spender, mainly because it paid for most of the property plant and equipment in the factories that made its phones and computers. [...]

But that all changed with AI. Amazon is spending $200 billion this year on AI data centers. Google, $185 billion. Microsoft, $114 billion. Meta, $135 billion. Combined: $650 billion. (Not including OpenAI, Anthropic and SpaceX/XAI.) That is like buying the US Navy every year. And yet Apple’s capital budget is still a modest $14 billion, oscillating with new hardware tooling cycles.

Apple is refusing to transfer its cash flow to Nvidia. Curiously, it believes that its cash flow belongs to its shareholders, not to Nvidia’s.

The hyperscalers are now spending 94% of their operating cash flows on AI infrastructure. Amazon is projected to go negative free cash flow this year with as much as $28 billion in the red. Alphabet’s free cash flow is expected to collapse 90% from $73 billion to $8 billion. These companies used to be the greatest cash machines ever built. Now they’re borrowing money to keep the data center lights on.

It has served Apple very well to guard its free cash flow preciously ever since the company sprung back to growth under Steve Jobs. Are they stuck in the past by sitting this out, or wisely passing on a mania?

If they can make Apple Intelligence a first-class agentic AI by relying on Gemini, paying only $1 billion per year, it sure looks like genius. But given their track record with Apple Intelligence to date, that is an enormous “if”.

★ Sunday, 15 March 2026