While other Big Tech firms invested heavily in artificial intelligence data centers, Apple stayed on the sidelines, choosing to avoid the capex spending surge. But that appears to have changed with Apple realizing it needed to join the AI data center game.
Loop Capital analyst Ananda Baruah late Monday said Apple is in the process of placing orders for about $1 billion in Nvidia GB300 NVL72 systems. That equates to about 250 servers at $3.7 million to $4 million each, he said in a client note.
Apple is working with server builders Dell Technologies and Super Micro Computer on its large server cluster to support generative AI applications, Baruah said.
"AAPL is officially in the large server cluster Gen AI game … and SMCI & DELL are the key server partners," he said. "While we are still gathering fuller context, this appears to have the potential to be a Gen AI LLM (large language model) cluster."
Baruah believes Apple's strategy shift was compelled by troubles in bringing its AI-enabled Siri digital assistant to market. Apple has indefinitely delayed the release of the new Siri. The company had hoped to launch the AI features early this year after previewing them at its Worldwide Developers Conference last June.
Apple reportedly has shaken up its executive team in response to the company's struggles to release AI features. One executive called the delays and miscues "ugly" and "embarrassing" because the company had been promoting AI capabilities in TV commercials, Bloomberg reported.
On the stock market today, Apple stock rose 1.4% to close at 223.75. Meanwhile, Nvidia stock dipped 0.6% to 120.69. Dell slid 1% to 98.82 and Supermicro fell 2.6% to 40.64.
Loop rates Apple stock as hold and Nvidia, Dell and Supermicro as buy.
Apple stock is on the IBD Tech Leaders list.
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