Tim Cook says Apple is “very open” to AI acquisition

Apple's AI strategies and investments were in the minds of analysts with revenue calls after reporting third quarter revenues, which showed an overall revenue growth of 10% year-on-year.

Apple never announced any major acquisitions or initiatives in revenue calls, but CEO Tim Cook's remarks on Thursday confirm the company is investing more in technology.

Cook said Apple will “significantly” increase the company's investment in AI. He added that Apple is always trying to buy companies of all sizes that will help develop AI products.

“We are very open to M&As that accelerate our roadmap,” Cook said. “We don't just have a certain size company, but the companies we've acquired so far this year are essentially small.”

Cook said Apple has acquired “about seven companies” so far this year, but not all of them are focused on AI. Cook has said in the past that Apple has always valued potential acquisitions of any size, but the biggest purchase of 2014 was Beats Electronics for $3 billion.

He made the remarks Thursday as Apple is putting pressure on its Silicon Valley peers from Wall Street.

Apple was not the biggest spender of capital spending for large tech companies. In the June quarter, we only reported capital expenditures for the June quarter, up from $2.15 billion the previous year. The expenses for this quarter are at the highest since the quarter ended in December 2022. If Apple spent as much as the quarter, it would be about $14 billion a year.

This is rarely compared to last week's $85 billion capital expenditure for fiscal year 2025, estimates of up to $72 billion annual capital expenditures, and current quarterly estimates from Microsoft's $30 billion capital expenditure guide.

“We've increased our investments significantly. We've been in the June quarter, and we'll go again in the September quarter,” Cook said.

He added that Apple is relocating staff internally to get more focused on AI.

“We're also reassigning quite a few people to focus on AI capabilities within the company,” Cook said. “We have an incredible team and we have all the energy behind it.”

To be clear, Google and Microsoft are running a cloud business that rents AI hardware. Apple Finance chief Kevan Parekh also said the company has a “hybrid” model for capital investment. This model gains access to the required systems through a partner and records them as operating expenses.

Apple also said that some of CAPEX pays servers using their own chips called private cloud computing, rather than merchant chips from companies like Nvidia.

“I think a significant portion of the growth factors you're seeing right now is really driven by some of our AI-related investments,” Parev said.

Cook also downplayed the possibility that devices with AI that have not yet been invented could threaten Apple's iPhone franchise. Former Apple design Guru Jony Ive has teamed up with Openai to sign a $6.5 billion deal but has not revealed what the product is or what it costs.

“It's hard to see a world where the iPhone doesn't live inside it,” Cook said. “That doesn't mean we don't think about anything else either, but I think the device is likely to be a complementary device rather than an alternative.”

Cook also revealed that he called on investors and analysts to have an AI strategy that Apple is running.

“From an AI perspective, our focus is to put AI capabilities across a platform that is personal, private and seamlessly integrated,” Cook said.

When asked if he thought that a large-scale language model (core AI technology created by humanity and companies such as Openai) could be commoditized, Cook refused to answer, saying that for now he kept some of the company's strategy a secret.

“The way we see AI is that it is one of the deepest technologies of our lifetime,” Cook said. “It has a huge impact on all devices.”

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