Apple’s R&D investments top 10% of sales as AI race creates ‘sense of urgency’

Don’t confuse R&D with CapEx

Apple’s R&D spending hit 10.3% of revenue in the March quarter, as the the tech giant ramps up investments in artificial intelligence.

The increase puts Apple closer to the rest of megacap tech on R&D, though the iPhone maker is still taking a very different approach when it comes to capital expenditures, according to CNBC. R&D spending was up from 7.6% in the prior period and 9% in the same quarter a year earlier. While sales jumped 17%, the fastest rate of growth for any quarter since 2021, R&D climbed twice as quickly, increasing almost 34% from a year prior, according to CNBC.

“That’s a sign that Apple is seeing a sense of urgency around new AI products,” said Gene Munster, managing partner at Deepwater Asset Management.”

Horace Dediu, founder of Asymco, agreed that a major question is where all that spending is going. Much of the increase, he said, is likely tied to talent, teams and experiments in training and modeling, rather than the kind of large-scale data center deployment underway at the hyperscalers. But he also said Apple is pushing across hardware, investing in silicon, optics, batteries, materials, sensors and smaller form factors.”

“AI is an obvious candidate, but R&D is not capex,” Dediu said.

Excerpt From Apple’s R&D investments top 10% of sales as AI race creates ‘sense of urgency‘ by MacKenzie Sigalos, Jennifer Elias, CNBC

Source: CNBC

NB: Apple has been increasing its R&D spending from around 2% to 9% of sales on a 4-trailing quarter basis. It has overtaken SG&A which has remained around 7% since 2011.

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