Apple ramps AI investment, lifts R&D share

Apple spent 10.3% of revenue on research and development in the March quarter, its highest share in at least 30 years as it ramps AI work.

The company said Siri and Apple Intelligence updates are due later in 2026, and R&D rose nearly 34% from a year earlier while revenue increased 17%.

Analysts said the increase suggests Apple is trying to narrow the gap with bigger AI spenders such as Google and Microsoft.

Apple spent US$4.3 billion on capital expenditure over the past two quarters, down from about US$6 billion a year earlier.

Tim Cook said its work with Google on Gemini is going well.

🔗 Source: CNBC

🧠 Food for thought

Implications, context, and why it matters.

Apple’s capital spending looks small beside rivals. Google expects about US$90 billion in annual spending in 2025 1.
Part of that difference comes from Apple’s plan to license Google’s Gemini AI model for a newer Siri. The deal reportedly costs about US$1 billion a year 2.
That move gives Apple access to a leading outside AI model without covering the full cost of building every layer itself. Apple is still spending on its own models plus infrastructure 1.
Gemini-based features are said to run through Apple’s Private Cloud Compute, Apple’s system for AI work on remote servers with privacy protections. Apple says it does not store user data or make it available to Apple, and the data is used only to complete requests. The cited source does not say the system blocks Google from seeing user data 2.

The Google partnership fits a wider plan that treats the underlying AI model as a part Apple can swap, not something it must build from scratch 3.
That suggests Apple expects large language models, AI systems trained on vast amounts of text to generate human-like responses, to grow more alike over time and become commodities 3.
If that plays out, advantage would move toward user experience, product integration, and privacy. Apple has long competed well in those areas 3.
This flexible approach could let Apple pit AI providers against one another later. They might even pay for access to Apple’s user base, much as Google is estimated to pay Apple about US$20 billion a year to remain the default search provider in Safari, Apple’s web browser 4.