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Apple’s Tim Cook ‘very open to M&A that accelerates our road map’ for AI’ — company increasing spending on AI initiatives, reorganizing teams to address expansion
Being considerably behind other major high-tech companies with its artificial intelligence (AI) technologies, Apple is open to acquiring third-party companies to accelerate its AI roadmap as its management gets that gradual expanding its internal AI initiatives won’t cut in to become competitive with Google, Microsoft, OpenAI, or xAI.
‘Open’ to M&A
“We are very open to M&A (Mergers and Acquisitions) that accelerates our road map,” said Apple CEO Tim Cook during the company’s earnings call with financial analysts and investors, when asked about possible acquisitions of AI companies. “We are not stuck on a certain size company, although the ones that we have acquired thus far this year are small in nature. But we basically ask ourselves whether a company can help us accelerate our roadmap and if they do, then we are interested. But we do not have anything to share specifically today.”
During the call, Cook confirmed the company is increasing spending and reorganizing teams to address expansion of its AI initiatives. Apple is moving a significant number of employees to AI-related work and these teams are tasked with developing new features that leverage machine learning and related technologies across Apple’s hardware and software ecosystem.
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“The way that we look at AI is that it is one of the most profound technologies of our lifetime, and I think it will affect all devices in a significant way,” Cook said. “We are embedding it across our devices and platforms and across the company. We are also significantly growing our investments. Apple has always been about taking the most advanced technologies and making them easy to use and accessible for everyone, and that is at the heart of our AI strategy.”
Cook stated that Apple intends to grow its AI investment substantially, which is proven by the company’s increased CapEx (more on this later). This includes not only organic growth of the Apple’s existing teams and efforts, but also acquisitions of other companies of different sizes. In fact, the company has already made around seven takeovers this year, though not all were related to AI, according to Cook.
Apple’s high-profile takeovers
Historically, Apple has made numerous high-profile acquisitions that either expanded its market presence, or strenghtened its vertical integration.
Apple’s most notable acquisition remains Beats Electronics, purchased in 2014 for $3 billion. This transaction brought both the popular Beats headphone brand and the Beats Music streaming service, which became the foundation for Apple Music. For now, the Beats-branded portfolio clearly helps Apple to maintain the No.1 position on the market of wireless headsets and justifies development of custom silicon for these devices.
Other acqusitions were mostly focused on enhancing the company’s vertical integration.
In 2019, Apple expanded its hardware capabilities by acquiring Intel’ smartphone modem business for $1 billion, gaining key patents and over 2,000 employees to accelerate the development of its own 5G modems in a bid to reduce dependence on Qualcomm. This year the company finally released its first smartphone with its in-house developed modem inside and said that eventually it would use its own modems inside its devices.
Earlier, in 2018, Apple spent $600 million to acquire a portion of Dialog Semiconductor, including licensing power management technologies and hiring over 300 Dialog engineers, helping Apple bring more of its chip design in-house. In the early 2010s, the company broght Anobit Technologies to bring development of NAND controllers in house; fingerprint sensor company AuthenTec (Touch ID), and 3D sensing designer PrimeSense (Face ID).
Limited spending
Despite this renewed focus on AI, Apple’s infrastructure spending remains modest compared to other major high-tech companies. Apple allocated $3.46 billion on CapEx in Q3 FY2025, a rise from $2.15 billion in the same period last year. So far this fiscal year the company has spent $9.473 billion on ‘acquisition of property, plant, and equipment,’ which is how it calls its capital expenditures. Even if the company spends another $3.46 billion in Q4 FY2025 (which ends on September 29), its CapEx for the fiscal year 2025 will total $12.933 billion. If we annualize Apple’s CapEx to calendar year, its spendings will be between $13 billion and $14 billion, which is far behind Google’s $85 billion forecast for fiscal 2025, Meta’s projected $72 billion, and Microsoft’s $80 billion for calendar 2025, according to CNBC estimates.
Strong results
Apple posted total revenue of $94.0 billion for the third fiscal quarter ending June 28, 2025, a 10% increase from the $85.8 billion reported a year earlier. Net income for the quarter reached $23.4 billion, an increase from $21.4 billion in the third quarter of 2024. Gross margin for the quarter came in at 46.5%, compared to $46.27 billion last year.
As for product categories, iPhone remains the company’s No. 1 product with $44.6 billion in revenue, a notable rise from $39.3 billion at the same quarter last year Sales of Mac PCs generated $8.0 billion, compared to $7.0 billion last year. iPad revenue was $6.6 billion, slightly down from $7.2 billion in the prior year, which is a surprise as the company introduced an inexpensive iPad earlier this year. The Wearables, Home, and Accessories category brought in $7.4 billion, a decline from $8.1 billion in Q3 2024. Meanwhile, Services revenue continued its upward trajectory, reaching $27.4 billion, up from $24.2 billion in Q3 FY2024.
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