On March 25, 2025, Loop Capital announced that tech giant Apple Inc. is taking significant steps to enter the next generation of artificial intelligence by engaging in the large server cluster generative AI space. This transformation appears to be driven by the company's recent struggles with its voice assistant, Siri, which has experienced persistent issues prompting Apple to rethink its AI strategy.
As part of the new initiative, Apple is reportedly placing orders for about $1 billion worth of GB300NVL72 servers, estimated at around 250 units priced between $3.7 million and $4 million each. The primary server partners for this venture are Super Micro Computer, Inc. and Dell Technologies, which recently reported a market capitalization of $69.64 billion.
Loop Capital analyst Ananda Baruah noted, "AAPL is officially in the large server cluster Gen AI game… and SMCI & DELL are the key server partners." These servers are expected to form a robust cluster capable of supporting large language models (LLMs), which are critical components for generative AI technologies.
Apple's pivot towards generative AI denotes a significant move away from its previous reliance on traditional AI and machine learning methods. As the competitive landscape of AI evolves rapidly, this shift is seen as essential for strengthening Apple's position in the market. Loop Capital's analysis implicated that the lingering troubles with Siri have played a considerable role in this strategic change.
The ongoing delays in launching new Siri capabilities, which Apple had initially hoped to unveil during its Worldwide Developers Conference last June, have highlighted the urgency for Apple to enhance its AI infrastructure. The company has since delayed the release indefinitely, much to the embarrassment of Apple executives who have publicly touted AI advancements.
Despite these setbacks, Apple shares rose by 0.8% to $222.48 in morning trades, indicating investor optimism regarding the company's new strategy. Loop Capital maintains a hold rating on Apple stock while simultaneously issuing buy ratings for partners Nvidia, Dell, and Super Micro due to their pivotal roles in Apple’s ambitious new initiative, including the substantial upgrade of business infrastructures.
Meanwhile, Dell Technologies showcased impressive financial growth, reporting $95.57 billion in revenue, with an 8.08% growth rate over the past twelve months. However, it did fall slightly short of the analyst expectations for quarterly earnings, with a reported earnings per share (EPS) of $2.68 against the anticipated $2.51 and total revenues of $23.9 billion against the expected $24.55 billion. Despite this, Dell's Infrastructure Solutions Group saw an impressive 22% year-over-year growth, hitting $11.4 billion in revenue driven primarily by a 37% increase in its server and networking segment.
Recent evaluations by analysts have adjusted their outlook on Dell, with Loop Capital and UBS reducing their price targets to $130 and $150, respectively, while Mizuho Securities cut its target to $140 but retained a positive outlook, reinforcing Dell's strong position within the AI server market. Analysts predict rapid growth in Dell's AI server segment, with revenues expected to climb to at least $15 billion by the fiscal year 2026.
This power shift to generative AI comes at a crucial time as the tech industry focuses on developing robust data centers to support advanced machine learning applications. As Apple takes steps to bolster its AI capabilities, competitors and investors will be closely monitoring Apple’s integration of generative AI into its product offerings.
The idea that Apple must innovate aggressively isn't merely about enhancing its existing capabilities. It is about securing its future in an industry that is evolving faster than many realize. As we watch this transformation unfold, the larger implications for Apple's market position and for advancements in AI technology promise to be groundbreaking. With major investments in AI infrastructure, it reflects Apple's acknowledgment of its previous missteps related to AI deployments, particularly with Siri.
The journey towards a more advanced AI landscape is now underway for Apple, marking a significant step towards potential recovery and revitalization of its AI capabilities. As they invest in state-of-the-art server solutions, the outcome will undoubtedly influence how Apple is perceived in the tech industry and beyond.
