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Nov. 1, 2025, 10:13 a.m.
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Apple's Hybrid AI Computing Strategy and Rising Capital Expenditures in 2024

Brief news summary

On Apple’s Q4 earnings call, CFO Kevan Parekh detailed the company’s approach to AI infrastructure, highlighting a hybrid model that leverages both its own chips and external computing capacity. Unlike some competitors that heavily invest in AI chips, Apple purchases computing power from third parties while using its custom chips to power its Private Cloud Compute service. This contrasts with other tech giants’ aggressive capital expenditures: Alphabet plans $92 billion this year, Microsoft spent $34.9 billion last quarter and aims to increase spending, Meta targets about $71 billion on AI chips and related costs in 2025, and Amazon raised its 2025 forecast to $125 billion, a 6% increase. Apple’s capital spending rose 35% to $12.72 billion in fiscal 2025, ending in September, with analysts forecasting $14.3 billion this year. A portion of this spend is dedicated to expanding Apple’s Private Cloud Compute in first-party data centers, underscoring its strategic, balanced investment in AI infrastructure.

Rather than simply purchasing as many AI chips as possible, Apple acquires computing capacity from external partners, explained finance chief Kevan Parekh during the company’s fourth-quarter earnings call on Thursday. When Apple constructs servers to support its AI software, it utilizes its own chips — not those from Nvidia or AMD — to power a service known as Private Cloud Compute. “I don’t foresee us moving away from this hybrid approach, where we leverage both first-party capacity and third-party capacity, ” Parekh stated. Alphabet announced it expects to spend approximately $92 billion on capital expenditures this year. Microsoft reported spending about $34. 9 billion on capex during its September quarter and plans to increase capex for fiscal 2026 compared to the previous year. Meta’s stock dropped sharply after CEO Mark Zuckerberg defended the company’s plan to spend roughly $71 billion on AI chips and other expenses in 2025.

Meanwhile, on Thursday, Amazon raised its 2025 spending forecast by 6%, to $125 billion. In its fiscal 2025, which ended in September, Apple spent $12. 72 billion on capital expenditures. This amount represents a 35% increase over the previous year, marking a substantial rise. Parekh noted that Apple anticipates further growth. Analysts, according to FactSet, project Apple’s capex will climb to $14. 3 billion this year. “In ’25, we incurred capex costs related to the expansion of our Private Cloud Compute infrastructure within our first-party data centers, ” Parekh explained.


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