Big spending, big profits

M.G. Siegler: Apple's Binary Bet

It's just such a wild break from their peer group. And it keeps getting more wild. It seems like the most binary bet imaginable. Either Apple is right and the rest of Big Tech will have lit hundreds of billions – perhaps trillions when all is said and done – of dollars on fire, or Apple is going to be in big trouble.

This chart from Siegler's article is making the rounds in my feeds among AI skeptics.

It illustrates something pretty clear, right? Apple's able to turn big profits with minimal capital expenditures while the rest of the industry is bleeding money on AI. Apple fanboys will say this is "the most brilliant move in corporate history".

It is certainly true that Apple has not invested in capital expenditures like the other companies mentioned here, but I also think it's worth noting that these large increases in spending from the likes of Alphabet, Microsoft, Amazon, and Meta have coincided with relatively massive increases in net income as well.

In short, they're spending more, but their profits are still going up. Don't assume that because OpenAI and Anthropic are running on huge losses that everyone investing heavily in AI is doing the same.