The recent earnings season saw a series of massive capex announcements by major players. Meta (META), Microsoft (MSFT), Alphabet (GOOG)(GOOGL) and Amazon (AMZN) were among the players that disclosed enormous AI spending plans.
So far, Apple (AAPL) appears to be an exception among the mega-cap tech plays. Some analysts see the iPod maker as having a unique position among the Magnificent 7, pointing to it as essentially an AI-free (or at least AI-lite) play.
Instead of massive capex spending plans, Apple relies on partnerships like its billion-dollar deal with Google for Gemini rather than building its own AI infrastructure. This creates both risks and potential advantages.
Seeking Alpha analyst Jack Bowman called Apple’s approach to AI a “genius strategy” that allows the firm to benefit from the buildout of the technology without the capital intensity. Meanwhile, fellow SA analyst Julia Ostian argued Apple would be the strongest refuge if AI investments prove to be a bubble.
“Apple has this genius strategy, right? They reduced their capex by 20% last year,” Bowman said on a recent edition of SA’s Investing Experts Podcast. “No need to spend on data centers, everyone else will do it for us.”
Speaking on the same podcast, Ostian noted: “If we all wake up one day and realize that [AI] was all for nothing, like the Metaverse, although I don’t think it can be, but in general, if that happens, Apple has a very, very high chance of being the strongest stock in the market and the stock where everyone will run and the software everyone will run.”
“What is [Apple CEO] Tim Cook seeing that I’m not seeing? Is he seeing it’s all FOMO?” asked Kenio Fontes, another SA analyst who appeared on the podcast panel. Cook is “not participating in this AI race, nothing related to LLM or nothing,” Fontes added, saying the CEO is sticking to the firm’s buybacks “with the 3% shareholder yield, and that’s it.”
Despite admiration for Apple’s products and business model, the analysts also expressed concerns about the stock’s valuation. Fontes and Ostian noted that they don’t currently own the stock due to valuation concerns.
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