Amazon spent ~$68B on R&D

Comparing R&D expense across Big Tech

January 14, 2023 ā€¢ Estimated Reading Time: 2 minutes

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Today, we are looking at the ginormous amount of money spent on research & development (R&D) by the Big Tech companies.

But first, what kinds of costs are classified as ā€œR&Dā€

R&D costs is mainly the money spend by companies to develop new products and services. For example, engineering costs related to writing code for the new iPhone.

Tech is a very competitive industry, and often, these costs are essential for companies to find their next breakthrough revenue source (e.g. AWS for Amazon,= or the iPhone)

Take a look at the visual below:

R&D spent by Big Tech

These 5 companies, spent a total of $190 billion in last 12 months on R&D.

Couple of interesting observations from the chart above:

  1. Amazon spends more money on R&D, than Google and Apple combined. I was shocked to see this! However, Amazon is known to place a lot of new bets and this costs reflect that.

  2. Meta is investing heavily in R&D, relative to its size. While it has always been a big spender on R&D, this has ramped up recently with its pivot into the Metaverse

A big question for investors to answer is if these high costs are justified and if (or when) will they bear fruit in finding new growth avenues for companies.

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