Apple's Tim Cook calls on-device AI a 'competitive weapon' as rivals pour billions into data centres

Key points

• Apple spent $2.46 billion on capital expenditure in the June 2026 quarter, well below the $3.44 billion analysts had expected.
• Alphabet, Amazon, Meta and Microsoft have each committed to more than $100 billion in capital expenditure for 2026.
• Tim Cook steps down as Apple CEO on 1 September 2026, moving to an executive chairman role.
• Apple plans to offer extra AI usage through iCloud+ subscriptions, though Cook said no complete pricing plan exists yet.
• For heavy AI tasks such as image generation, Apple routes requests to Google Cloud hardware built on Nvidia GPUs.

Tim Cook used what will likely be his final earnings call as Apple's chief executive to defend a bet that most of Silicon Valley is not making: spend less on data centres and let the device in your pocket do the work.

While Amazon, Google, Meta and Microsoft are each committing more than $100 billion this year to building the giant server farms that power AI, Apple spent just $2.46 billion on capital expenditure in the three months ending June 2026. That figure, first reported by CNBC Tech, came in well below Wall Street's $3.44 billion estimate.

So what exactly is Apple's strategy?

Apple runs much of its AI suite, called Apple Intelligence, directly on its own chips inside iPhones and Macs rather than sending every request to a remote server. Cook called this on-device approach "very strategic and sort of a competitive weapon."

The practical benefit: your data never leaves the phone for those tasks, and neither does your money. Apple used Disney as a concrete example, saying creative teams there are moving AI work to Mac to cut cloud costs and keep their intellectual property secure.

For tasks that demand more computing muscle, such as generating images, Apple routes requests out to Google Cloud. That infrastructure runs on Nvidia GPUs, the specialised chips that do the heavy number-crunching AI needs, and Intel central processors. Apple confirmed this arrangement in June 2026 when it first detailed the software.

What does the new Siri mean for iPhone users?

The relaunched Siri, Apple's voice assistant, will rely on the iPhone's own processor for most queries. It will decide, on the fly, whether to answer locally or hand a harder question off to the cloud.

There is a catch. Apple said it will cap how much cloud-based AI any user can access for free. Go above that limit and you may need to pay for a higher iCloud+ tier, the subscription service Apple already sells for storage and other features. Cook said the company has no "complete plan" yet for pricing, but confirmed that heavy users will find some kind of upgrade option inside iCloud+.

For now, the basic AI features should be free with any compatible iPhone. If you are a casual user, nothing changes. If you want to generate hundreds of images a month or send thousands of complex queries, expect a paid option to appear this autumn.

What happens next?

Cook hands the CEO title to his successor on 1 September 2026 and moves to executive chairman. The new Siri launch, and whatever pricing Apple attaches to its cloud AI tier, will be among the first big tests of that handover.

Apple's stock dipped on earnings day amid concerns about supply constraints. Whether the on-device argument wins over investors will depend, in large part, on whether the updated Siri is good enough to matter when it finally arrives.

Common questions

Will Apple's AI features cost extra?

Basic Apple Intelligence features come with compatible iPhones at no extra charge. Apple plans to charge for heavier cloud-based use through iCloud+ subscriptions, but has not announced exact prices yet.

Is my data sent to Apple's servers when I use Apple Intelligence?

For tasks handled directly on your iPhone or Mac, no data leaves your device. For more demanding tasks such as image generation, requests go to Google Cloud servers, and Apple says those interactions are not stored or used to train AI models.