Most big technology companies indicated this earnings season that their capital spending on artificial-intelligence data centers is continuing unabated. That makes Apple Inc. stand out even more for how much it's not spending.

Investors once worried that Apple $(AAPL)$ was behind the pack in AI because it wasn't spending as much as its rivals. But now Apple's strategy might have more shine, at least according to one analyst.

Melius Research's Ben Reitzes said in a note Monday that as the "the four big clouds" - Alphabet Inc. $(GOOG)$ $(GOOGL)$, Amazon.com. Inc. $(AMZN)$, Meta Platforms Inc. $(META)$ and Microsoft Corp. $(MSFT)$ - boost their capital expenditures, those big outlays are going to affect their free cash flow. And that metric could get more scrutiny from Wall Street going forward.

"We were taught that a stock's value is supposed to represent the net present value $(NPV)$ of its future cash flows," Reitzes wrote in a note to clients. "Calculating NPV is a matter of perception that changes daily - including a discount rate that incorporates risk and assumptions for [capital expenditures] and depreciation." This is even harder now in the era of AI, he added.

But Apple, which even acknowledged on its earnings call last week that it takes a "very prudent and deliberate approach" to its capital spending, could very well have the "last laugh," Reitzes said.

"Apple could have the last laugh since it is a true 'toll road' to mobile AI," he wrote. "While haters focus on 'builds' and micro-data points, it's the free cash flow that matters. Apple can partner with OpenAI (and eventually with Baidu in China), while leveraging public clouds to help train models and run their services businesses."

Reitzes said Apple could ostensibly "pawn off" the excess capital expenditures and operating expenditures on other tech giants, which may embark on a capital spending craze that could last a few more years.

"As a result, Apple can deliver free cash flow structurally above net income right now as revenues accelerate for the next few years - while many others can't," he added.

Currently, Apple's free cash flow is expected to run higher than its net income, unlike at other tech giants. Reitzes pointed out that in fiscal 2024, Apple generated $109 billion in free cash flow, above its net income of $104 billion, converting free cash flow at a rate of nearly 5% to reported net income. Apple was able to buy back $26.5 billion in stock in the December quarter and is on track to buy back $30 billion per quarter "for the foreseeable future."

That free cash flow ratio looks sustainable through fiscal 2027, he said, adding that revenue should also reaccelerate with higher-priced iPhones.

For the cloud companies, ratios of free cash flow versus net income look more troubling, especially if their revenues do not meet estimates going forward. In fiscal 2025, free cash flow projections for Google, Microsoft, Amazon and Meta are 29%, 33%, 24% and 34% below their estimated net income, respectively, Reitzes noted.

"If cloud revenue doesn't beat estimates this year - and the market remains confused about DeepSeek-like innovations - investorpatience may wear thin and help Apple on a relative basis in the Mag 7," Reitzes said.

All the Magnificent Seven stocks - which also include Nvidia $(NVDA)$ and Tesla $(TSLA)$ - were trading slightly higher on Monday, along with the broader market, even after Goldman Sachs strategists pointed out in a report that for the first time in two years, none of those tech giants had positive sales surprises in their quarterly results. The strategists advised shifting investments into companies with potential to monetize AI, such as software and services companies.