Text size Show R&D growth has outstripped revenue growth by a factor of three since 2012, and now amounts to 7% of revenue.Elijah Nouvelage/AFP via Getty ImagesApple has long been an icon of American innovation. The iPhone, Mac, iPad, AirPods and other innovations have contributed to the company’s nearly $2 trillion market valuation, making it America’s most-valued company by a wide margin. But Bernstein analyst Toni Sacconaghi asserts that Apple (ticker: AAPL) is underspending on innovation relative to its peers. And it likewise is spending far less than rivals on the acquisition of new technology developed by others.
Sacconaghi points out in a research note on Tuesday that Apple was spending just 2.2% of revenue on research and development, “dramatically below peers,” when CEO Tim Cook succeeded Steve Jobs in 2011. It has been moving aggressively to catch up ever since. R&D growth has outstripped revenue growth by a factor of three since 2012, and now amounts to 7% of revenue. But Sacconaghi says that Apple, nonetheless, continues to underspend peers and he thinks comparisons with rivals argue for spending 10% or more of sales on research and development. Meanwhile, he notes that Apple has spent just 2% of free cash flow on mergers and acquisitions since 2012, versus the 25% of free cash that peers spent on deals. He notes that in the period from 2012 through 2019, Apple generated $436 billion in free cash flow, and spent just $6.9 billion on deals, choosing instead to return most of that to shareholders in the form of buybacks and dividends. “While share repurchases have historically been an effective use of cash and enabled Apple to grow EPS, we worry about potential parallels with IBM , who we believe underspent on innovation and overspent on buybacks, when it should have been reinventing itself amidst slowing product and services growth as computing moved off premise,” Sacconaghi writes. “The combination of low R&D spending and low M&A suggests that Apple may still be ‘underinvesting’ in innovation versus its peers,” he writes. “We continue to believe that Apple making large acquisitions is unlikely. Could the recent surge in Apple’s R&D spending presage new product innovation? Hard to say. On the one hand, we see potential in the sheer magnitude of Apple’s spending ($60 billion over the last 5 years) and the company’s focus on potential new categories,” citing autonomous driving and augmented reality. On the other hand,” the Bernstein analyst says, “Apple’s R&D budget last year alone ($16 billion) was greater than its cumulative R&D spend from 1999 to 2012, and yet the pace of new product introductions doesn’t appear to have accelerated. Sacconaghi maintains a Market Perform rating on Apple shares. “On the one hand, we find it somewhat difficult to see much upside to Apple’s valuation on a long-term basis. On the other hand, we believe the stock is now more or less ‘de-risked’ on a near-term basis. Apple’s stock has historically fared well in advance of new iPhone launches and sell-side expectations for the September 2021 fiscal year still look beatable.” Apple, as a matter or policy, declines to comment on analyst notes. The stock rose 0.8% to $462.25 on Tuesday. The Dow Jones Industrial Average fell 0.2%. Apple research and development expenses 2000-2021Amounts are in $millions. 
In 2021 Apple spent $21.9 billion on research and development compared to $18.85 billion in 2020. Its R&D expenses were 17% higher in 2021 compared to 2020. Apple's R&D expenses in 2020 grew to $18.8 billion compared to $16.2 billion in 2019. The research and development expenses of Apple Inc grew by 14% in 2019 compared to the previous year, rising to $16.2 billion from $14.2 billion in 2018. In 2019, the research and development expenses of Apple Inc were 6% of net sales compared to 5% in 2018. About Apple Inc:Founded in 1976 by Steve Jobs and Steve Wozniak, Apple Inc. has its headquarters in Cupertino, California, United States. The company is a leading technology brand and the maker of iPhone, Mac, and iPads. Apart from it, Apple also sells a nice range of wearables and services. The company has experienced solid growth in Net revenue in 2020 compared to the previous year. Its net revenue in 2020 grew to $274.5 billion compared to $260.2 billion in 2019. Apple's market cap is higher than $2 Trillion and it is the first company whose market cap exceeded 2 trillion. The company is currently led by CEO Tim Cook. What company spends the most on R and D?It may come as no surprise that the companies spending the most on research and development are the tech giants. According to data collected by Nasdaq.com, Amazon wins the title of the world's biggest spender, with R&D investments that amounted to nearly $43 billion in 2020, or about 11 percent of its revenue.
Does Apple spend a lot on R&D?Apple Inc. spent a record 21.91 billion U.S. dollars on research and development in its 2021 fiscal year, increasing by about three billion from its 2020 total.
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. How much did Apple spend on R and D?In 2021 Apple spent $21.9 billion on research and development compared to $18.85 billion in 2020. Its R&D expenses were 17% higher in 2021 compared to 2020. Apple's R&D expenses in 2020 grew to $18.8 billion compared to $16.2 billion in 2019.
Which company spends most on R&D 2020?Amazon spent the most on research and development in the fiscal year 2020, with about 42.7 billion U.S. dollars. Alphabet, Huawei, Microsoft, and Apple rounded out the top five of companies with the highest R&D spending that year.
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