Apple invests $11.73 billion in research – a new record

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Apple's research budget climbed to an all-time high in the June quarter. In nine months, the company spent almost as much as in the entire previous year. What's remarkable is not just the amount, but where it's going – and explicitly where it's not.

The figures for the third fiscal quarter show that Apple spent $11.73 billion on research and development. This is 32.3 percent more than in the same quarter last year and the highest figure the company has ever reported for a three-month period. This figure is included in operating expenses, which, at $19.08 billion, were at the upper end of the company's own forecast, while quarterly revenue reached a June record of $109.4 billion. This growth trend continued throughout the entire fiscal year.

Nine months is almost as long as a whole previous year

In the first three quarters of the current fiscal year, research and development spending totaled $34.04 billion. For the entire fiscal year 2025, it was $34.55 billion – meaning that after nine months, Apple has already reached 98.5 percent of the previous year's figure, with one quarter remaining. The annual expenditures for fiscal years 2024 and 2023 have already been surpassed.

Based on the level of the June quarter for the remaining three months, fiscal year 2026 would reach approximately $45.8 billion. That would represent an increase of almost one-third compared to the previous year. The previous quarter, at $11.4 billion, was also already 34 percent higher than the corresponding figure for the same period of the previous year.

The explanation from the telephone conference

Tim Cook stated in a conference call with analysts that Apple is noticeably investing more and that its research and development department is growing faster than the company as a whole. When asked about AI spending, he said the budget had increased significantly year-over-year. Chief Financial Officer Kevan Parekh added that the AI expenditures are being gradually added to the usual investments in the product roadmap – they are not replacing them, but rather being added on top.

The research budget is growing faster than revenue

More meaningful than the absolute sum is its share of the business. In the June quarter of 2025, 9.43 percent of revenue was invested in research and development; in the current quarter, it is 10.72 percent. Over a nine-month period, the rate increases from 8.19 to 9.34 percent.

Apple isn't just spending more because its business has grown, but is also shifting the focus towards development. Part of this is likely to go towards the chip generations that will power devices in the coming years – for the Mac, a roadmap with eleven new models by 2028 is reportedly in the works.

Apple issues different information than Alphabet and Meta

Investment appetite is not a given on the stock market these days. Alphabet shares fell by around 7 percent after the company raised its investment forecast for 2026 by $15 billion to between $195 billion and $205 billion. Meta shares declined by 9 to 10 percent after free cash flow plummeted by 91 percent and the lower end of its investment plan was raised to $130 billion. Apple shares were down about 4 percent in after-hours trading.

The comparison is flawed, however, in a way that favors Apple. Alphabet and Meta are investing in tangible assets – data centers, servers, network technology. Apple's $11.73 billion represents ongoing operating expenses for development. The company's own tangible assets, on the other hand, are negligible: In nine months, Apple spent $6.80 billion on land, buildings, and equipment – 28.2 percent less than in the same period last year. Its research budget thus exceeds this figure fivefold.

Apple is therefore not expanding its AI capabilities through its own data centers like its competitors, but rather through personnel, chip development, and acquired capacity. This explains why rising costs don't cause the same concern here as they do for corporations whose cash flow is consumed by physical buildings.

Munich is covering part of the bill

Part of this spending ends up in Germany. Apple has established Munich as its European Center for Chip Design, committing over one billion euros in 2021 to invest there over three years, followed by another billion in 2023 for expansion. According to the company, the location is Apple's largest development facility in Europe; the teams there work on power management, application processors, and wireless technologies.

This also includes modem development – the area in which Apple is currently gradually reducing its dependence on a single supplier. Qualcomm losing its Apple business faster than anticipated is inconceivable without the groundwork laid in locations like Munich. The research budget shown in the quarterly report thus has a very specific German focus.

The fourth quarter will determine the annual record

The final research expenditure for fiscal year 2026 will be determined with the September quarter results. It's already clear that Apple is significantly increasing its budget, while further developing Siri AI and its underlying infrastructure. Apple Intelligence features are already in use on iPhones, iPads, and Macs – they are the visible result of a budget that appears as just one line item on the balance sheet. (Image: Shutterstock / yucelyilmaz)