Following the disastrous launch of Apple Intelligence two years ago, Apple (AAPL) has fallen behind its peers in terms of AI spending and strategy. 

Fast forward to now, sentiments regarding Apple’s AI strategy may be shifting. 

Instead of building its own models and infrastructure, the company is leaning on external partners like Google to help it deliver AI offerings, saving billions of dollars in AI-related costs.

As a result, this pivot has caught the attention of investors wary about the massive spending commitments of AI hyperscalers. 

Investor Essentials Daily:
Tuesday News-based Update
Powered by Valens Research

Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), and Meta (META) are forecasted to collectively spend around $600 billion on AI-related infrastructure this year in a bid to secure leadership in the AI race.

While massive AI spending used to thrill investors, they are becoming increasingly wary as they wonder whether this enormous spending could deliver stellar returns.

Amid this spending spree, Apple (AAPL), one of Big Tech’s titans and another Magnificent Seven name, will spend considerably less—an estimated $14 billion in capex spending for 2026. 

Apple has leaned primarily on its consumer devices business and services segment in recent years. However, this doesn’t mean the company hasn’t attempted to make an AI-related play.

In 2024, the company announced Apple Intelligence, an on-device and server-supported AI offering for its device ecosystem, with an AI-powered version of its voice assistant Siri to follow thereafter.

While the news generated massive hype, this AI play largely floundered, as the upgraded Siri rollout hit multiple snags and delays. It even got to the point where Apple ultimately partnered with OpenAI to integrate ChatGPT with iOS.

The failed launch of Apple Intelligence cast a negative view on Apple’s ability to capitalize on the AI boom over the past two years.

However, this narrative about Apple may be shifting, as Apple’s revamped AI strategy is now seen as a “safe” play by investors wary of companies that have massively increased their AI spending.

Instead of heavily investing in AI infrastructure, the company has decided to lean on third-party partners to do the heavy lifting.

Apple and Google recently finalized a multi-year agreement—amounting to $1 billion annually—to have Gemini serve as the backbone of Apple’s suite of AI features and future foundational AI models.

This partnership allows Apple to integrate AI features into its iOS ecosystem without building its own models from scratch, saving billions on AI-related costs and enabling it to invest more money in its core offerings.

Aside from expected core product announcements, some reports state that the tech giant is actively working on AI-powered wearable devices expected to be released this year and the next.

It will take time to see how Apple’s AI strategy works out. Fortunately, even though it has lagged behind in its AI initiatives, this hasn’t prevented it from performing well in recent years.

During the first quarter of its 2026 fiscal year, the company reported nearly $144 billion in revenue, up 15.7% year-over-year. Product revenues rose 16% to $107 billion, with iPhone revenue contributing $85 billion. Meanwhile, the services segment delivered $30 billion, up 16% year-over-year.

And since 2020, Apple has delivered a Uniform return on assets (“ROA”) exceeding 30%. Last year, the company generated a Uniform ROA of 34% and Uniform asset growth of 10%.