Apple spends $12.7B on capex as AI rivals burn $400B+

Apple's disciplined capital allocation — low infrastructure spending paired with massive shareholder returns — looks increasingly strategic as AI stocks sell off on concerns about the $400 billion-plus data center build-out.

Apple's capital expenditures totaled about $12.7 billion in fiscal 2025, a fraction of the more than $400 billion that Microsoft, Alphabet, Meta Platforms and Amazon combined to spend on the same line item in calendar 2025. The gap is set to widen: Amazon alone expects its capital spending to reach about $200 billion this year, roughly 16 times what Apple spent in its most recent fiscal year.

"Our strong business performance during the March quarter generated over $28 billion in operating cash flow and drove new March quarter records for both operating cash flow and EPS," Apple Chief Financial Officer Kevan Parekh said in the company's fiscal second-quarter earnings release.

The Cupertino, California-based company is not ignoring artificial intelligence. It is simply funding the effort differently. Apple's research and development spending reached $34.6 billion in fiscal 2025 — nearly three times its capital expenditures — and climbed 33 percent year over year in the most recent quarter. At its developers conference this week, Apple unveiled a long-awaited Siri overhaul powered by Alphabet's Gemini models under a partnership that reportedly costs about $1 billion per year, with the new software arriving this fall.

The contrast in capital allocation strategies has sharpened as AI infrastructure stocks sell off. Oracle sank by a double-digit percentage after pairing record quarterly results with plans to raise tens of billions of dollars in additional financing for its data center build-out. Chip stocks also fell as investors questioned when the spending would start generating returns. Meanwhile, Apple announced a new $100 billion share repurchase authorization alongside its fiscal second-quarter results in April and raised its dividend 4 percent. The quarter was Apple's best March quarter ever, with revenue climbing 17 percent year over year to $111.2 billion and earnings per share jumping 22 percent.

The Buyback Trade-Off

The cash that rivals are pouring into data centers is, at Apple, still flowing to shareholders. But the buyback pace has moderated. Apple bought back $12.29 billion of its stock in the fiscal second quarter, down from an average of $23 billion to $25 billion per quarter. Neither Meta Platforms nor Alphabet spent a dime on buybacks in their most recent reported quarters. Alphabet went further, announcing plans to sell $84.75 billion in stock, effectively undoing years of buybacks to fund its AI infrastructure ambitions.

The reduced buyback activity carries broader market implications. S&P 500 companies spent $1.02 trillion on share repurchases over the trailing 12 months ending September 2025, a record fueled in part by the 2017 Tax Cuts and Jobs Act that lowered the corporate tax rate to 21 percent. If AI infrastructure spending continues to cannibalize that capital, the earnings-per-share boost that has supported the Trump bull market could diminish — a risk amplified by the S&P 500's Shiller price-to-earnings ratio near 43, more than double its historical average of 17.4.

The Risk of Relying on a Rival

Apple's approach carries its own set of risks. The revamped Siri runs on models built by a direct competitor rather than on Apple-owned technology. If AI assistants become the primary interface for device interaction, depending on Alphabet for that critical layer could prove costly. The rival now sits inside the product Apple's customers talk to, and the stakes are enormous: Apple's installed base has surpassed 2.5 billion active devices.

Investors should watch two things from here. The first is how quickly users embrace the new Siri once it ships this fall, which could be revealed in management commentary during the first quarterly earnings call after the release. The second is whether iPhone and services momentum holds up in upcoming quarterly reports. Sustained double-digit growth in both segments would suggest customers are buying into Apple's AI strategy.

Apple shares, trading at the $4.3 trillion market cap level, have held relatively steady during the AI sell-off. Restraint can look like timidity when AI infrastructure stocks are soaring, but when the market starts questioning the spenders' debt loads and cash burn, that same restraint starts to look like discipline. Letting someone else shoulder hundreds of billions in spending while keeping the customer relationship is the kind of position most businesses would envy — provided Apple can prove it still delivers great AI experiences.

This article is for informational purposes only and does not constitute investment advice.