Apple Avoids AI Infrastructure Arms Race With Multi-Billion Dollar Google Deal [Report]

Apple has chosen to sidestep the massive capital expenditure war currently consuming its tech rivals, opting instead to leverage a multi-billion dollar partnership with Google to power its next generation of artificial intelligence features. The strategic pivot positions the iPhone maker as a potential "kingmaker" in the industry, according to the Financial Times, while allowing it to avoid the hundreds of billions of dollars competitors are pouring into data centers and model training.



The company recently solidified a cloud computing agreement to use Google's Gemini models for upcoming iPhone features and a revamped Siri. The deal is reportedly structured as a cloud computing contract that could see Apple paying Google billions of dollars over time. Gene Munster of Deepwater Asset Management estimates the value of the deal could reach $5 billion for the search giant.


While Apple has stated that its existing integration with ChatGPT will remain in place, the new alliance is a blow to OpenAI. Industry observers point to potential friction stemming from OpenAI's ambition to build its own consumer hardware. The startup has been working with former Apple design chief Jony Ive on a device intended to challenge the iPhone, a dynamic that likely influenced Apple's decision to deepen ties with Google instead.

The partnership reflects Apple's cautious approach to infrastructure spending. While competitors like Microsoft, Amazon, and Meta have committed hundreds of billions to build AI data centers, Apple has kept its physical infrastructure investment at roughly 3 percent of revenue. In its 2025 financial year, Apple spent $12.7 billion on property, plant, and equipment—a fraction of the estimated $90 billion Google is projected to spend. This aligns with the hybrid AI strategy executives outlined late last year, which relies on a mix of third-party cloud providers and its own Private Cloud Compute servers.

Apple's reliance on partners comes after internal challenges in developing foundation models. The company missed the early phase of intensive research that fueled the current generative AI boom and has faced significant talent attrition. Several top researchers have defected to Meta, and the company recently saw AI chief John Giannandrea step down. Despite these hurdles, Apple shares have gained more than 12 percent over the past year, buoyed by strong sales of the iPhone 17.

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