CNBC’s Steve Kovach joins 'Money Movers' to discuss Apple looking to significantly increase spending on AI and spending across the sector.

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

Leading technology companies are ramping up capital expenditures on artificial intelligence to address growing demand and maintain a competitive edge. Microsoft, Amazon, Alphabet, and Meta are each investing tens of billions of dollars, with Microsoft and Amazon leading at over $100 billion each. Apple is also increasing its AI spending, focusing on talent and computing resources, but has not disclosed specific figures and is presumed to spend less than its competitors.

Each company is pursuing a unique AI strategy. Meta is prioritizing core AI for advertising growth, though returns on generative AI investments are expected to take longer. Amazon and Microsoft are focusing on providing the cloud infrastructure for AI, while Alphabet supports both consumer-facing products and cloud services. Apple may be positioning itself to partner with established AI firms rather than building its own models from scratch, potentially leveraging existing technologies to power its AI initiatives.

Big tech ramps up AI spending

more than ever on AI ramping up capital expenditures well to outlooks and to levels that we've really never seen. Of course we heard from so many companies this week in terms of trying to meet that soaring demand for AI and stay ahead in that race. Steve Kovach looks at that in today's Tech Check. Steve. Yeah we got those fresh AI CapEx numbers David and within those numbers and the commentary from the college we're learning a lot about the different AI strategies for each of these companies. First of all everyone is increasing. Look at them right there. Microsoft and Paces spend 120 billion dollars. Amazon 118 billion dollars. Alphabet 85 billion. Meta 72 billion. The outlier here though is of course Apple. I talked to Tim Cook yesterday about this. He told me they're significantly increasing spending on artificial intelligence. That's for both talent and compute but no real number. Presumably though it's a lot less than those others are spending. I'm gonna get back to Apple in a second but first let's go over what this means for the other names here. Meta. They call it core AI that's driving the ad growth but CFO on the call said it's going to take longer for generative AI investments to pay off. Unclear what that looks like but we of course know Meta likes to scale first and then figure out the monetization later. As for Amazon and Microsoft they're not really consumer facing AI products. They're the cloud backbone of artificial intelligence. Microsoft's Azure growth is accelerating because of that and it needs all that capex to support growth. As for Alphabet supporting consumer products like Gemini search and other things plus the cloud backbone of course just like those other two cloud hyperscalers. Now let's get back to Apple because this one is really interesting because they're clearly not spending as much. Something really stuck out to me on the earnings call though. Cook was asked if AI models are becoming commoditized. He said he didn't want to comment on that because it would give away his strategy. My read into that Apple is poised to partner with an AI company like OpenAI or Anthropic to power Apple intelligence as Bloomberg previously reported a couple weeks ago. Of course it's a lot cheaper to build on top of this proven AI technology instead of building it from scratch guys. Yep it's all about the AI strategy. Thank you very much.

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Big tech ramps up AI spending

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Rise of AI