Who Gets the Bill
Apple’s research and development 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, as the company ramps up investments in artificial intelligence. 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 AI ambitions. Sales jumped 17%, the fastest rate of growth for any quarter since 2021, while R&D climbed almost 34% from a year earlier. The people buying the phones and services keep feeding the machine while the company pours more of that revenue into the next layer of automation.
Gene Munster, managing partner at Deepwater Asset Management, said, "That's a sign that Apple is seeing a sense of urgency around new AI products." He also said, "Apple is catching up to the other mega-tech companies when it comes to R&D for AI." Across Google, Microsoft, Meta and Amazon, the average year-over-year R&D increase for the quarter was 29%. The race is not about serving users; it is about which giant can spend faster, hoard more talent, and dominate the next technical layer first.
What the Bosses Are Building
Apple CEO Tim Cook said, "We are clearly investing more," and said R&D is "accelerating much higher than the company is," adding that Apple is "investing in products and services." Bernstein analysts said the jump from the December quarter to the March period was evidence of Apple's pursuit of AI opportunities, with Siri and Apple Intelligence updates confirmed for later this year. Analysts at Bank of America said 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. In late 2001, Apple introduced the first iPod, and Apple's R&D as a percentage of sales jumped in 2001 from 5% to 8%, where it stood until 2003, the year the company rolled out the iTunes Music Store. Gil Luria, an analyst at D.A. Davidson, called the early iPod era a "good parallel because they were reinventing the form factor by introducing a brand new hardware platform." He said, "Spending 10% of revenue is a lot more now than it was then, mostly because they have to execute on a much bigger scale," and added, "A hit iPod sold millions of units, a hit in glasses or AI pin could sell hundreds of millions."
The Scale of the Machine
Apple isn't talking about new types of devices that may be coming, but Bloomberg reported earlier this year that the company is speeding the development of three upcoming AI wearables all built around Siri: smart glasses, a pendant and AirPods with cameras. Where Apple has been notably behind its tech peers is in capital expenditures. Google, Amazon, Meta and Microsoft are collectively spending many hundreds of billions of dollars a year on capex to build out massive data centers filled with AI chips and systems. Apple only spent $4.3 billion on capex over the past two quarters, down from about $6 billion over the same stretch a year earlier.
The company is leaning heavily on Google, announcing in January that the search giant's Gemini technology would power its AI features, including the forthcoming Siri upgrade. When pressed on the earnings call about how Apple is balancing its internal AI model development and its work with Google, Cook said, "The collaboration with Google is going well." He added, "We're happy with where things are, and we're happy with the work that we're doing independently as well," without elaborating. Apple CFO Kevan Parekh said the company is no longer targeting "net cash neutral" and "will independently evaluate cash and debt."
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." She said, "Analysts tried every which way to ask what they were working on. In typical Apple fashion, they did not answer. There will be a new Siri this year, but it sounds like they have more up their sleeves." The secrecy is part of the routine: the public gets hints, analysts get managed, and the actual roadmap stays locked behind the corporate curtain.
Horace Dediu, founder of Asymco, said much of the increase 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. He also said Apple is pushing across hardware, investing in silicon, optics, batteries, materials, sensors and smaller form factors. Dediu said, "AI is an obvious candidate, but R&D is not capex." Oppenheimer analysts pointed to Apple's work around on-device AI, private cloud compute, agentic AI running on custom chips and privacy, saying those areas require sustained engineering investment. They said the investments appear to be scaling ahead of clear monetization.
Investors can now turn their attention to Apple's Worldwide Developers Conference in June, where the company typically announces a bevy of upcoming services and features. In the fall, the company is expected to debut its first major iPhone form factor change in years: a foldable device, alongside an AI-enabled Siri Apple has been promising. Behind the scenes, Apple has been building its own AI models, developing silicon for on-device inference and expanding the infrastructure needed to support Apple Intelligence. Cook said, "We don't get into our future roadmap."
The article was written by MacKenzie Sigalos and Jennifer Elias and published on May 6, 2026.