Analysts at TF International Securities said in a post that they believe Apple (NASDAQ:AAPL) will need to invest several billion dollars annually to catch up with the competition in generative AI.
The analysts explained that their latest survey indicates Apple plans to purchase 2,000 to 3,000 and 18,000 to 20,000 units of AI servers in 2023 and 2024, respectively, representing "about 1.3% and 5% of worldwide AI server shipments in 2023 and 2024, respectively."
"We think it’s reasonable to assume that the AI servers Apple purchases are primarily this year’s most popular specification: Nvidia’s HGX H100 8-GPU, designed for generative AI training and inference," the analysts said. "It’s also expected that some shipments in 4Q24 will likely upgrade to the B100 solution."
They estimate that Apple will spend at least about $620 million in 2023 and $4.75 billion in 2024, although they note that the AI server purchases are significantly lower in 2023 than in 2024 due to a shortage of Nvidia (NASDAQ:NVDA) AI chips starting from 2Q23.
Even if the supply of Nvidia AI chips improves in 2024, Apple’s AI server purchases still lag behind its competitors, the analysts said.
"It’s reasonable to estimate that Apple would have to invest at least several billion US dollars annually to have a chance of catching up with its competitors," they added.
"If Apple really intends to spend only a billion dollars a year on generative AI development, it won’t matter much if our survey is wrong, but we are genuinely concerned about the future of Apple’s generative AI business/service."