Apple’s AI Strategy Turns Toward Leaner Spending and Bigger Revenue

Apple is tightening the purse strings on internal AI usage just as its executives present artificial intelligence as a major path to future growth. Engineering teams saw their daily AI spending cap fall from $300 to $200 in October, and some allowances could drop to $100 a day.

Outside engineering, Apple is weighing limits as low as $25 a day. The move creates a striking contrast: Apple wants AI to drive upgrades, services, and new partnerships, but it is also putting firm boundaries around the cost of using the technology inside the company.

Apple’s AI Budget Is Getting Smaller

The spending reductions affect the daily amount engineering teams can use for AI. Apple is planning more cuts, with some teams facing allowances of $100 per day, while workers outside engineering could receive a daily limit as low as $25.

Those limits show how Apple is approaching the AI spending race. The company spent $2.2 billion on capital expenditures last quarter, compared with $77.3 billion for Amazon and $51.4 billion for Alphabet. Apple’s operating expenses still rose 21% to $19.2 billion as it increased research and development spending, including spending on AI, but its infrastructure bill remains far below those larger rivals.

Apple’s latest earnings show a company trying to benefit from the AI boom without matching competitors’ infrastructure spending. AI and Apple Intelligence were mentioned 45 times on the earnings call, a record according to AlphaSense, yet Apple has not disclosed how much of its revenue growth comes from AI demand or higher prices.

TechCrunch has reached out to Apple for comment and more information.

AI Could Push Customers Toward New Devices

Apple’s executives continue to describe AI as a reason for customers to buy new hardware. Chief financial officer Kevan Parekh said, “On the product side, you know, we feel AI offers a compelling reason for customers to upgrade and switch in order to get the latest capabilities, and we also feel there’s opportunities across third-party apps and partnerships as well as first-party opportunities.”

John Ternus said, “We see tremendous opportunity in AI.” Apple’s results give that argument a strong financial backdrop: iPhone revenue rose 17.5% from a year earlier to a September quarter record of $57.6 billion, while Mac revenue climbed 24% to $10.8 billion, its highest level in four years.

Overall, Apple posted its best-ever fiscal year for revenue and earnings per share. Shares still fell in premarket trading Tuesday after Apple warned that rising memory costs would squeeze profit margins during the holiday quarter. Apple’s stock price also carries a premium valuation despite its growth prospects, slipping profit margins, and the underdeveloped state of its AI efforts.

Apple’s AI plans include letting users choose among outside AI providers for features such as writing tools and image generation. Siri AI’s cloud costs will appear in services cost of sales, and Parekh said it is too early to predict how many requests will require servers instead of on-device processing.

Apple launched its revamped assistant in beta for US English users in September, then expanded it to French, Japanese, Korean, Portuguese, and Spanish in October. Ternus said features that rely on server-side models, including Siri AI and intelligent photo editing, will have usage limits. Customers who need more capacity “will be able to purchase expanded access in the future,” he said.

The App Store Becomes Apple’s AI Opportunity

Apple’s second AI push runs through the App Store. During Monday’s earnings call, Parekh said the company could use third-party apps and partnerships to expand services revenue, although he did not explain what those opportunities would look like.

Investors are asking whether Apple could distribute third-party AI agents through the App Store and take a cut of the revenue they generate. The idea arrives as legal and regulatory changes weaken Apple’s control over App Store payments in some markets.

Third-party estimates in August suggested Apple’s U.S. commission revenue had dropped 18%, with declines in Brazil and Japan after those countries introduced new regulations. Apple has traditionally controlled payments inside its app marketplace, taking a cut of App Store transactions, but a lawsuit by Epic Games forced the company to let apps redirect users to outside payment systems. Other legal challenges around the world have added pressure.

Parekh said App Store performance during the September quarter was similar to the prior year, while paid subscriptions reached a record and third-party apps posted double-digit growth. He also pointed to headwinds in mobile gaming and said Apple expected those pressures to continue into the summer quarter.

Apple expects services growth of 8 to 9% in the December quarter. That outlook includes headwinds from third-party licensing and an additional half percentage point of foreign exchange, according to Parekh.

Earlier this year, Apple was on pace to collect more than $1 billion in App Store fees from generative AI apps in 2026, according to AppMagic. OpenAI has begun directing potential subscribers to pay through its website instead of the App Store, bypassing Apple’s commissions, but the opportunity remains clear: Apple can sell the computer, collect a subscription commission, and eventually charge for more of its own services without building every model or funding infrastructure on its competitors’ scale.

Local AI Gives Apple Another Route

Apple is also pushing AI toward its hardware, where local processing can reduce cloud token costs. Gap runs AI entirely on Mac Mini computers for loss prevention across hundreds of stores, while Christie’s uses local models on Mac Studio computers to improve workflows such as pricing estimates.

Ternus said Mac is “having an AI moment all its own.” He also said Mac Mini and Mac Studio “are pushing the boundaries of local, private AI, giving users the ability to do things once considered impossible.” Earlier this year, Tim Cook said customer recognition of those computers’ AI and agentic capabilities was happening faster than Apple predicted, leading to higher-than-expected demand.

In the beginning, iCloud tiers focused on storage, but Apple has been adding capabilities and features. That same expansion could give Apple more ways to turn AI access into services revenue while keeping internal spending under control.

Apple’s strategy is taking shape: limit AI costs inside the company, use local hardware where possible, invite outside providers into its ecosystem, and make AI a reason to upgrade. The next challenge is proving that this disciplined approach can produce enough revenue to satisfy investors while Apple catches up in an AI market it chose not to dominate through spending.

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