Apple Uses Hybrid Capital Model to Minimize AI Spending

Apple Inc. is employing a low-spend capital strategy for artificial intelligence infrastructure, diverging from the heavy investment patterns of its primary competitors. While Alphabet, Amazon, Microsoft, and Meta Platforms are collectively spending over $700 billion on AI capacity, Apple Inc. reported capital expenditures of $12.7 billion for fiscal 2025.

Chief Financial Officer Kevan Parekh described this approach as a "hybrid" capital model. The company rents computing power from third-party cloud providers while simultaneously utilizing its own chips for the Private Cloud Compute infrastructure that supports Apple Intelligence.

This financial strategy has contributed to record operating cash flow, which exceeded $28 billion in the March quarter. The company is also experiencing accelerated growth, with fiscal second-quarter revenue increasing 17% to $111.2 billion. This growth was driven by record services revenue and the iPhone 17 lineup. Apple is scheduled to release its fiscal third-quarter report on Thursday, July 30.