Apple May Spend Over $5 Billion By 2024 On Servers In Major Generative AI Push

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A new survey by an Apple analyst suggests the Cupertino-based company could spend several billion dollars in 2024 in order to catch up in the AI race. Analyst Ming-Chi Kuo expects Apple to spend "at least" $620 million on servers in 2023 and an estimated $4.75 billion on servers in 2024.

The AI race is hot and heavy between giant tech companies, with many using its own servers equipped with NVIDIA's high-end GPUs for generative AI training. Kuo believes Apple is currently purchasing servers equipped with NVIDIA's HGX 8-GPU for generative AI training, and is looking to upgrade to B100 next year. His latest survey indicates that Apple plans to purchase 2,000-3,000 AI servers in 2023, and an additional 18,000-20,000 in 2024.

Each of the HGX H100 8-GPU servers cost an estimated $250,000. This means that Apple will spend around $620 million in 2023 and $4.75 billion in 2024. Kuo points out that Apple's lower server purchase numbers in 2023 are mainly due to an NVIDIA AI chip shortage that began in the beginning of 2023. This was only compounded by Apple placing its orders later than other companies.

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Jensen Huang poses with a DGX GH200 board sporting eight Hopper GPUs.

Companies like Meta are outpacing Apple in terms of server purchases. Meta is expected to purchase around 40,000 units, compared to Apple's 18,000-20,000, in 2024. To make matters even worse for Apple, companies like Meta are already far ahead in terms of server purchases.

Kuo points out that if Apple does not utilize its servers for things such as cloud hosting, it is not appropriate to compare its numbers to Microsoft, which is expected to purchase 80,000-100,000 units in 2024. Kuo also believes Apple will opt to train its large language models on its own servers, rather than virtual hosts which can open it up to security and privacy risks.

Since Apple's AI infrastructure is far less than its competitors, Kuo says it will have to rely on having superior software development capabilities to catch up. This also means that Apple will have to invest several billion dollars annually to even have a chance to catch up with its competitors.

Apple is definitely behind in the race for AI server dominance, and it will take a lot of money for the tech giant to become competitive in AI. So, it is probably a good thing Apple has plenty of money to invest.