Apple shares moved lower in early Monday trading after the tech giant said it would pair with its key supplier to build an AI-focused data center in Texas as part of a broader plan to spend more than $500 billion in the U.S. over the next four years.
Apple (AAPL) CEO Tim Cook, who met last week with President Donald Trump in the White House, said the spending commitment signaled it's "bullish on the future of American innovation" and will include a boost to its US Advanced Manufacturing Fund aimed at developing high-tech production skills.
Trump had said last week that Cook had assured him that the new data center would be built in the U.S., and not in Mexico, although it was unclear if there had been a previous plan to construct the facility south of the border.
"We’re proud to build on our longstanding U.S. investments with this $500 billion commitment to our country’s future,” Cook said in a statement.
“From doubling our Advanced Manufacturing Fund, to building advanced technology in Texas, we’re thrilled to expand our support for American manufacturing," he added. "And we’ll keep working with people and companies across this country to help write an extraordinary new chapter in the history of American innovation.”
“We are bullish on the future of American innovation," said Apple CEO Tim Cook.TheStreet/Getty
The new data center, expected to be completed by 2026, will house servers that support Apple Intelligence, the group's bespoke AI technology, which now powers its latest generation of iPhones and laptop computers.
Apple commits to big Texas project
Taiwan-based Hon Hai Precision, which is commonly known as Foxconn and is Apple's main iPhone assembler, will also help construct the 250,000-square-foot data center, slated for the Houston area.
"Previously manufactured outside the U.S., the servers that will soon be assembled in Houston play a key role in powering Apple Intelligence, and are the foundation of Private Cloud Compute, which combines powerful AI processing with the most advanced security architecture ever deployed at scale for AI cloud computing," Apple said.
The broader $500 billion spending plan includes, however, purchases from Apple suppliers, media production for its Apple TV+ division and other infrastructure tied to its Apple Intelligence rollout.
Apple did not break down the amount of new spending included in its $500 billion plan, which works out to around a third of its annual revenue when spread over the four-year period.
Apple makes a smart move - Wedbush analyst Ives
Webush analyst Dan Ives, who carries an outperform rating and $325 price target on Apple stock, called the decision a "smart strategic move at the right time."
"We believe this was a strategic move by Cook & Co. to continue diversifying its manufacturing strategy in both the US and globally while also playing well into Trump’s US investment theme given the $500 billion Project Stargate announced earlier this year," Ives said.
"Cook continues to prove that he is 10% politician and 90% CEO, and [at] times like this he will be using his strong ties globally to make sure it's smoother waters for Cupertino ahead despite the market agita around Apple's growth initiatives with Trump heading down the tariff-threat path," he added.
Late last month, Apple posted fiscal-first-quarter revenue of $124.3 billion, its highest-ever total for the three months ended in December, even as iPhone sales slipped amid the uneven rollout of the group's Apple Intelligence AI features.
Apple also posted a record bottom line of $36.3 billion; per-share profit was $2.40, up 10% increase from the year-earlier period.
Finance chief Kevan Parekh, meanwhile, said Apple's current-quarter revenue would likely rise in the low- to mid-single-digits percent from a year earlier. That advance likely translates to between $91.7 billion and $95.3 billion, largely in line with Wall Street's estimates.
Apple shares were marked 10.9% lower in premarket trading to indicate an opening bell price of $243.49, a move that would nudge the stock into negative territory for the year.
