R&D Market Pulse: US tax policy could spur R&D investment, more than one-third of manufacturers using AI

As 2024 nears its end, global R&D-driven industries are navigating a mix of policy shifts, strategic realignments, and accelerating innovation. A proposed policy change could transform how U.S. companies expense their R&D investments, while manufacturing floors are seeing surging AI integration with over a third of companies successfully deploying the technology. In automotive, GM is making a strategic pivot away from robotaxis to focus on personal autonomous vehicles, as NVIDIA expands its Beijing presence despite growing U.S.-China tensions. Meanwhile, Boeing is committing $1 billion to address production challenges, and Amazon launches an ambitious new AI lab in San Francisco.

Corporate news

R&D World Index posts weekly decline

The R&D World Index (RDWI) for the week ending December 13, 2024 closed at 3,905.32 for the 25 companies in the RDWI. The Index was down -1.56% (or -61.98 basis points). Six RDWI members gained value last week from 0.83% (Microsoft) to 8.44% (Alphabet/Google). Nineteen RDWI members lost value last week from -0.05% (Toyota) to -9.55% (Oracle).

Proposed U.S. policy could spur domestic R&D investment

A policy change proposed by the President-elect Trump administration could dramatically affect U.S. R&D economics. The change would enable U.S. firms to record all of their domestic R&D expenses immediately as they spend those monies. Since 2022, companies have had to amortize their R&D spending over five years. With this immediate spending record, companies’ current reported earnings would go down along with their current tax bills. The resulting boost to current cash flows could spur more investment. The policy change is intended to encourage companies to invest more in U.S.-based R&D. The largest industrial sector positively affected by the change would be healthcare/pharmaceuticals, which invest heavily in R&D to develop new drugs.

AI R&D

Generative AI integration in manufacturing

The 2024 State of Manufacturing report created by Fictiv, San Francisco, California, states that more than a third of its manufacturing members have successfully integrated artificial intelligence (AI) into their operations, including R&D. According to the report, generative AI opens new opportunities, allowing companies to interact with data more intuitively via natural language queries and making tools like materials informatics more accessible. This approach allows researchers to have a personal data scientist at their fingertips, improving efficiency and productivity.

NVIDIA and OpenAI focus on long-thinking AI models

NVIDIA’s CEO, Jensen Huang, has repeatedly mentioned over the past several months that society is at the beginning of a new generation of foundation models that can reason and engage in “long thinking.” These models are designed to take more time to consider results, provide updates on processing progress, and even seek feedback. Huang said that Nvidia researchers are working on AI applications that run for 100 days. OpenAI, based in San Francisco, introduced long-thinking capabilities in September with the launch of its o-series models, which are designed to spend more time processing before responding—reasoning through complex tasks and solving harder problems than previous models in science, coding, and math.

Automotive R&D

NVIDIA strengthens Beijing team for autonomous driving

NVIDIA, Santa Clara, California, announced last week that it has added about 200 people to its staff in Beijing, China this year to enhance its R&D and focus on new autonomous driving technologies. Nvidia is being investigated by the U.S. Federal Trade Commission, which is seen as part of the growing U.S.-China trade dispute. The President-elect has threatened more tariffs on goods from China, while Beijing has announced an export ban on key materials.

GM abandons robotaxi ambitions to refocus on personal AVs

RDW Index member General Motors, Detroit, Michigan, officially announced last week that it has realigned its autonomous driving strategy by developing advanced driver assistance systems on a path to fully autonomous personal vehicles. The new offering will build on Super Cruise, the company’s hands-off, eyes-on driving feature available on more than 20 GM models. GM will no longer fund Cruise’s robotaxi development work—citing the considerable time and resources needed to scale that business. Facing an increasingly competitive robotaxi market, GM expects to reduce its R&D spending on robotaxi by more than $1 billion with the proposed plan.

Technology R&D

Boeing invests $1B to boost 787 production capacity

Boeing, Crystal City, Virginia, announced last week that it will invest $1 billion in its North Charleston, South Carolina operations to boost production of its 787 Dreamliner jets. This move aims to address a growing production backlog caused by manufacturing problems, safety issues, and parts shortages. The company is looking to increase its current production rate of five planes per month to 10 per month by 2026. Boeing currently has about 785 unfulfilled orders for the 787 jet. Yet the company also announced that 67 employees at its South Carolina sites would be laid off on February 21, 2025, as part of broader cuts affecting nearly 5,000 jobs across 11 states. Boeing has faced $8 billion in losses throughout the year.

Job growth holds steady as inflation outlook remains uncertain

Recent trend data shows that U.S. inflation has slowed and could be stalled. A report in the Wall Street Journal states that investors should not anticipate further interest rate cuts in 2025, despite any that may occur in December. The report expects that two or three quarter-point cuts could occur by the end of 2025. Despite the recent inflation slowdown, job growth remains steady, and overall economic momentum is strong, with product growth showing an annualized 2.8% gain.

Amazon’s AGI SF Lab to advance AI agent capabilities

Amazon.com, Seattle, Washington, announced last week the opening of a new R&D facility, the Amazon AGI SF Lab in San Francisco. The main goal of this lab is to create foundational capabilities for AI agents that can work both online and offline, handling complex workflows using computers, web browsers, and code interpreters. The Lab’s first focus will be on critical research areas that allow AI agents to take real-world actions, learn from human feedback, self-correct, and infer new goals. The Lab will be staffed initially by existing employees, with plans to hire more researchers in fields such as quantitative finance, physics, and math.

The R&D World Index

R&D World’s R&D Index is a weekly stock market summary of the top international companies involved in R&D. The top 25 industrial R&D spenders in 2020 were selected based on the latest listings from Schonfeld & Associates’ June 2020 R&D Ratios & Budgets. These 25 companies include pharmaceutical (10 companies), automotive (6 companies), and ICT (9 companies), which invested a cumulative total of nearly 260 billion dollars in R&D in 2019—approximately 10% of all the R&D spent globally by government, industries, and academia combined, according to R&D World’s 2021 Global R&D Funding Forecast. The stock prices used in the R&D World Index are tabulated from NASDAQ, NYSE, and OTC common stock prices for the companies selected at the close of the Friday preceding the online publication of the R&D World Index.

Rank	Company	Ticker	Exchange	2020 R&D Billions $	12/06/24	12/13/24	12/06/24 to 12/13/24	1/1/22 to 12/13/24
1	Alphabet/Google	GOOGL	NASDAQ	27.303	176.49	191.38	8.44%	32.12%
2	Microsoft	MSFT	NASDAQ	17.198	443.57	447.27	0.83%	32.99%
3	Volkswagen AG	VWAGY	OTC	17.259	9.03	9.41	4.21%	-67.80%
4	Apple	AAPL	NASDAQ	18.667	242.84	248.13	2.18%	29.74%
5	Facebook/Meta	META	NASDAQ	13.874	623.77	620.35	-0.55%	84.44%
6	Intel	INTC	NASDAQ	14.503	20.92	20.34	-2.77%	-60.50%
7	Johnson & Johnson	JNJ	NYSE	13.750	149.31	146.62	-1.80%	-14.29%
8	Roche Holdings AG	RHHBY	OTC	14.143	36.51	35.39	-3.07%	-31.53%
9	Merck & Co.	MRK	NYSE	11.381	103.09	102.00	-1.83%	33.09%
10	Novartis	NVS	NYSE	9.387	101.99	98.36	-3.56%	12.45%
11	Toyota	TM	NYSE	10.724	175.95	175.86	-0.05%	-5.09%
12	Pfizer	PFE	NYSE	8.336	25.73	25.58	-0.58%	-56.68%
13	Alibaba	BABA	NYSE	6.006	85.93	87.82	2.20%	-26.07%
14	GM	GM	NYSE	6.727	53.41	52.53	-1.65%	-10.40%
15	Honda	HMC	NYSE	8.806	26.04	25.46	-2.23%	-10.51%
16	Ford	F	NYSE	9.340	10.51	10.39	-1.14%	-49.98%
17	AbbVie	ABBV	NYSE	13.949	176.19	173.37	-1.60%	28.04%
18	Sanofi SA	SNY	NYSE	7.750	48.46	46.80	-3.43%	-6.59%
19	Cisco	CSCO	NASDAQ	6.331	59.89	58.62	-2.12%	-7.50%
20	Bristol-Myers Squibb	BMY	NYSE	7.130	59.38	55.78	-6.06%	-10.54%
21	Astra Zeneca PLC	AZN	NYSE	6.056	68.20	66.58	-2.38%	14.30%
22	IBM	IBM	NYSE	5.368	238.04	230.82	-3.03%	72.69%
23	Oracle	ORCL	NYSE	6.928	191.69	173.39	-9.55%	98.82%
24	Eli Lilly & Co.	LLY	NYSE	8.606	826.71	789.12	-4.55%	185.69%
25	Stellantis NV	STLA	NYSE	5.309	13.65	13.95	2.20%	-28.65%
Total				269.522	3967.30	3905.32	-1.56%	38.50%
ICT					2083.14	2078.12	-0.24%	43.36%
Automotive					288.59	287.60	-0.34%	-15.88%
Biopharmaceutical					1595.57	1539.60	-3.51%	49.73%