Why is Apple's R&D run rate suddenly $40 billion/yr.?

Office Hours question asked by Frederich H. on May 1, 2026.

Q: Any thoughts on the breakdown of R&D, with that big jump?

It's hard to tell. I do think they're buying — that does include some hardware. A lot of hardware. I think they're building quite a bit of capacity in order to implement their versions of AI. They're not for deployment, but they're for testing and experimenting. They're hiring people as well, obviously that's included. But I do think it used to be they bought equipment for testing — I don't know, radio frequencies, and testing the iPhones, and semiconductors, and testing a lot of things like that. But I do think probably there's a lot more spending now on the stuff that feeds AI. It's not on the level that a hyperscaler's doing, because they're building it for scale, and Apple's maybe building it for testing.

We're talking about here, look, $11 billion in R&D, that's in one quarter. So that goes out to about $40 billion a year.

Mostly, I think this is people, but there is some equipment involved. It's just maybe different ways of capitalizing it, because capital equipment is a complex story.

It seems like a big jump, but it's only $2 billion more compared to the prior period. It's recurring though. And the reason that this stays steady and keeps growing is because people are on the payroll. And so if there's more and more people, that's paid every period — the reason, by the way, you see SG&A being seasonal is because there's temporary people in the stores. That involves people who are hired for the holidays in the Apple stores. So that's where you see some less than steady. But engineering people are more steady. But if there's a spike, there might be something going on where there was some equipment involved.

See also R&D Acceleration section of Apple 2026 FQ2 Presentation.

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Editor's Note: This is a lightly-edited revision of a question asked by participants in Asymco's May 2026 Office Hours live Q&A sessions, open to Asymco One subscribers.