Apple’s R&D spending reached 10.3% of revenue in the March quarter as the company accelerates its investments in artificial intelligence.
The jump brings Apple closer to its megacap tech peers on R&D intensity, though the iPhone maker continues to pursue a notably different strategy on capital expenditures.
“That’s a sign that Apple is feeling real urgency around new AI products,” said Gene Munster, managing partner at Deepwater Asset Management.
MacKenzie Sigalos and Jennifer Elias for CNBC:
For the first time in at least 30 years, Apple is spending more than 10 cents of every dollar it brings in on research and development, one of the strongest signs yet that the iPhone maker is dedicating big money to its artificial intelligence ambitions.
Apple’s R&D spending hit 10.3% of revenue in the March quarter, up from 7.6% in the prior period and 9% in the same quarter a year earlier. And 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.
Gene Munster, managing partner at Deepwater Asset Management, said Apple’s push puts it closer to the hyperscalers, noting that across Google, Microsoft, Meta, and Amazon, the average year-over-year R&D increase for the quarter was 29%
“Apple is catching up to the other mega-tech companies when it comes to R&D for AI,” Munster said. “That’s a sign that Apple is seeing a sense of urgency around new AI products.”
Bernstein analysts flagged the jump in a note published Sunday, pointing to the increase from the December quarter to the March period as evidence of Apple’s pursuit of AI opportunities, with Siri and Apple Intelligence updates confirmed for later this year…
Nancy Tengler, CEO of Laffer Tengler Investments, said the combination of stronger guidance, rising R&D and Apple’s decision to alter its approach to cash makes it feel like “there is something brewing.”
MacDailyNews Take: There’s a ton of stuff in the hopper, but much of it hinges on an advanced Siri that actually works. We believe we’ll finally see exactly that this year.
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Having Srouji at the helm of hardware, maybe Apple should look into ‘not what that runs AI,’ but AI itself. LIKE SIRI ON A CHIP. I know it sounds like madness but there are many advantages, the immediate first one being Privacy