Big Tech’s AI Spending Surge
Five major tech companies are projected to spend over $700 billion on artificial intelligence data centers by 2026. In contrast, Apple is spending significantly less—only $12 billion last year and an expected increase in free cash flow to $123 billion in 2026. This financial strategy allows Apple to prioritize share buybacks, leading to an anticipated growth in earnings per share even amidst broader market capital expenditures.
Apple’s Strong Performance and Challenges
Apple’s iPhone sales rose 23% year-over-year last quarter, particularly driven by a 38% increase in China. However, supply constraints with chip suppliers like Taiwan Semiconductor Manufacturing and the memory chip market may impact gross margins. The company’s services segment continues to grow, with a 14% increase, potentially benefitting from advancements in AI capabilities integration across its applications.
Future Outlook
Apple’s CEO, Tim Cook, has overseen over $700 billion in share repurchases since taking office, decreasing its share count by 44% since 2013. This strategy positions Apple to outperform its peers, particularly in a landscape where competitors like Amazon and Meta face declining free cash flow due to high capital expenditures.
