Apple’s R&D spending climbs to 10% of revenue on AI investments

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.

With CEO Tim Cook preparing to step down following a 15-year run at the helm, he’s finally putting the kind of muscle into AI that investors have been seeking since OpenAI kicked off the generative AI boom in late 2022. 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.”

In reporting results that topped analysts’ estimates and boosting its revenue forecast last week, Apple’s main talking points during earnings centered on surging demand for iPhones and Macs and the global memory crunch caused by insatiable demand for AI infrastructure.

But the R&D increase got some attention from Cook, who will be turning over the top job to longtime hardware boss John Ternus in September.

“We are clearly investing more,” Cook said on the call. He noted R&D is “accelerating much higher than the company is,” and that Apple is “investing in products and services.”

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.

Analysts at Bank of America wrote in a report that they expect R&D as a share of revenue to stay above 10% in the June quarter before easing slightly in the back half of the fiscal year. Morgan Stanley‘s model also shows the company’s R&D rising sharply in fiscal 2026.

R&D spending has been slowly ticking up as a percentage of Apple’s revenue in recent years after sitting in the low- to mid-single digits for most of the prior two decades. The recent increase is reminiscent of the early 2000s, when the company was recovering from the dot-com crash and spending slowdown that followed 9/11.

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