Apple's major competitors in the tech industry have allocated significant sums to research and development by focusing on constructing data centers to support AI services. For instance, Microsoft allocated $14 billion towards capital expenditures in the last quarter, with Meta Platform's projected capital expenditures of up to $40 billion for the current year.

However, Apple diverges from this trend by adopting a distinct strategy. 

Despite its lower capital expenditure of just over $10 billion in 2023 compared to its rivals, Apple's focus on consumer device sales has led to concerns among investors about its competitive position in the AI sphere, per The Daily Beast.

READ NEXT: Apple Stock Soars $112 Billion After Announcing Plans to Use AI in Mac Computers

How does Apple make a profit?

In contrast to companies like Meta, Google, and Microsoft, which primarily generate revenue from software and advertising services, Apple's revenue predominantly stems from consumer hardware sales. 

Apple's upcoming software conference is set to introduce new AI features and AI-compatible chips, a move that holds promise for the company's future. Chief Financial Officer Luca Maestri, however, cautions against expecting a drastic change in Apple's approach to capital expenditures.

Maestri also reiterated Apple's longstanding practice of cost-sharing with suppliers for manufacturing tools. This approach has effectively managed costs and bolstered cash generation for over a decade. It extends to data center operations, where Apple uses both its own infrastructure and third-party capacity.

Despite some skepticism, Apple CEO Tim Cook has been responding to questions from financial analysts about its plans for artificial intelligence (AI). Cook has indicated that the company will provide more specific information about its AI projects shortly.

The potential impact of AI features, such as device-integrated chatbots, on Apple's hardware sales is a topic of debate. While enhanced processors may attract professional users in need of AI tools, it's uncertain if they will lead to a significant increase in device purchases.

It's noteworthy that Apple's recent announcement of AI integration in its devices had a significant impact on its stock value, which soared to $112 billion, according to VCPost.

READ MORE: Apple Reportedly Acquired French AI Startup Datakalab, Focusing on AI and Computer Vision