Apple to Invest Heavily in AI to Close Gap With Microsoft and Google

Apple is accelerating its artificial intelligence (AI) strategy as CEO Tim Cook signals a willingness to invest heavily in the technology to close the gap with Microsoft and Google [1]. The company is shifting away from its traditionally conservative spending approach to build new data centers and potentially acquire larger AI-focused firms, a move that marks a significant strategic pivot [2]. Cook emphasized during the Q3 2025 investor call that AI is one of the most profound technologies of the era, and Apple is reallocating resources to integrate it across its product ecosystem [3].

Apple has already acquired seven smaller AI firms this year, with Cook indicating the pace is roughly one every several weeks. While the recent acquisitions have been small in scale, the company is open to acquiring larger players if they align with its goals [3]. “We don’t limit ourselves to companies of a certain size,” Cook stated, highlighting Apple’s flexibility in its M&A strategy. The company is particularly interested in acquiring talent and technology that can accelerate its AI development [1].

The urgency behind Apple’s AI push stems from the competitive landscape, where Microsoft and Alphabet have made substantial inroads through cloud-based infrastructure and AI-driven products. Google alone plans to invest up to $85 billion in AI by 2026, while Microsoft is targeting $100 billion [3]. Apple’s internal AI capabilities have lagged, partly due to its reliance on third-party cloud providers such as OpenAI and the limited progress of internal AI models. This has contributed to weaker improvements in product offerings and delayed AI advancements, such as an upgraded version of Siri [1].

To address these challenges, Apple is exploring ways to enhance its AI offerings, including the potential acquisition of Perplexity, an AI search company. Analysts have suggested a $40 billion deal to acquire Perplexity, though such forecasts remain speculative and have not been confirmed by the company [4]. Meanwhile, Apple is also considering AI-driven enhancements for its Safari browser and is in discussions to improve search features that could reduce its dependency on Google, which currently pays billions annually to be the default search engine on iPhones [1].

Apple’s AI ambitions are being tested amid broader industry shifts and legal uncertainties, particularly Google’s antitrust lawsuit, which threatens to disrupt its search revenue. At the same time, emerging startups are developing AI-powered browsers that could challenge Apple’s current ecosystem [3]. Despite these pressures, Apple reported better-than-expected Q3 iPhone sales and record revenue, which provides some financial flexibility as it ramps up AI investments [3].

While Apple’s AI spending is growing, it remains significantly lower than the nearly $400 billion in combined investments by Microsoft, Meta, Amazon, and Alphabet [5]. Cook has not disclosed a specific figure but has stated the company is “ready to open its wallet” to compete. The success of Apple’s AI strategy will depend on the speed and effectiveness of its acquisitions, as well as its ability to integrate new technologies into its existing ecosystem [1].

Sources:

[1] Title: CEO Tim Cook says Apple ready to open its wallet to catch ...

Url: https://www.reuters.com/business/ceo-tim-cook-says-apple-ready-open-its-wallet-catch-up-ai-2025-08-01/

[2] Title: Tim Cook says Apple is 'very open' to AI acquisitions

Url: https://www.cnbc.com/2025/07/31/tim-cook-apple-ai-acquisitions.html

[3] Title: Apple plans to 'significantly' grow AI investments, Cook says

Url: https://techcrunch.com/2025/07/31/apple-plans-to-significantly-grow-ai-investments-cook-says/

[4] Title: Apple's $40 Billion AI Gamble: Will Perplexity Be the Game ...

Url: https://www.ainvest.com/news/apple-40-billion-ai-gamble-perplexity-game-changer-2508/

[5] Title: Microsoft, Meta, Amazon and Alphabet pour nearly $400 ...

Url: https://www.cnbctv18.com/technology/microsoft-meta-amazon-and-alphabet-pour-nearly-400-billion-into-ai-19647491.htm