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The Seattle-headquartered company’s spending reflects Amazon’s ambition to lead not just in e-commerce, but in a growing number of fields ranging from cloud computing and AI to robotics, logistics, and healthcare.
As CEO Andy Jassy stated, when announcing the 2023 full-year results, a significant portion of the company’s investment is fueled by Amazon’s belief that generative AI, while still a small revenue generator today, “will ultimately drive tens of billions of dollars of revenue” across multiple business segments in the years ahead.”
Big Tech’s AI arms race
This multi-billion dollar AI arms race is playing out across the Big Tech landscape. Alphabet, with its $45.427 billion R&D budget, is positioning its dominance in search and its research expertise through Google DeepMind to launch AI models ranging from Alphafold 3 for protein structure prediction to Gemini, its answer to OpenAI’s ChatGPT. Alphabet’s AI strategy hasn’t been without speed bumps, however, as the rushed launch of its Gemini chatbot and genAI-enabled search faced questions about factual errors and bias.
Top 10 industries by number of companies
Meta, after a costly foray into the metaverse, has also shifted its focus to AI, spending $38.48 billion on R&D in 2023. The company is now funneling its considerable resources into developing its large language model, LLaMA, and is weaving AI into its products, from generative filters on Instagram to AI-powered ad creation tools.
Merck & Co. and Apple round out top 6
Merck & Co. and Apple round out the fifth and sixth top R&D spenders, respectively, with budgets of $30.531 billion and $29.915 billion. The company has also expanded its AI focus in recent years with partnerships with Absci, Iktos, and Cyclica, companies that have an AI focus. It is also investing heavily in data science internally to strengthen its data and advanced analytics team. Its spending figures in 2023, however, were skewed by investments such as $10.2 billion for the acquisition of Prometheus Biosciences, another $5.5 billion related to forging a collaboration with Daiichi Sankyo, and $1.2 billion for acquiring Imago BioSciences.
Meanwhile, Microsoft is betting on its enterprise software prowess and its close relationship with OpenAI (creator of ChatGPT) to deliver AI technologies for businesses and challenge Amazon’s dominance in cloud computing. The companies are reportedly mulling a $100 billion data center project in the coming years.
R&D spend by industry sector
Based on data from the 2023 EU Industrial R&D Investment Scoreboard of the European Commission’s Joint Research Centre, software and computer services invested the greatest sum of cash in R&D although tech firms were outnumbered by pharma/biotech companies in the dataset. Other industries investing aggressively included technology and hardware companies such as Huawei and NVIDIA and automotive firms such as Toyota and General Motors.
Note data for the bar chart and pie chart are drawn from The 2023 EU Industrial R&D Investment Scoreboard. The table below was manually curated from annual reports.
Article continues after the table highlighting the top 30 R&D spenders of 2023:
| Company | Ticker | 2023 R&D billion$ |
|---|---|---|
| Amazon | AMZN | 85.62* (technology and infrastructure) |
| Alphabet Inc. (Google) | GOOGL | 45.43 |
| Meta Platforms, Inc. | META | 38.48 |
| Merck & Co., Inc. | MRK | 30.531 |
| Apple Inc. | AAPL | 29.915 |
| Microsoft Corporation | MSFT | 27.195 |
| Volkswagen AG | VWAGY | 23.581 |
| Huawei | Private | 23.26 |
| Samsung Electronics | 005930.KS | 19.80 |
| Intel Corporation | INTC | 16.0 |
| Johnson & Johnson | JNJ | 15.1 |
| Roche Holding AG | RHHBY | 12.79 |
| Novartis AG | NVS | 11.37 |
| NVIDIA | NVDA | 11.33 |
| AstraZeneca PLC | AZN | 10.94 |
| Mercedes-Benz Group AG | MBGYY | 10.81 |
| Pfizer Inc. | PFE | 10.68 |
| General Motors Company | GM | 9.88 |
| Eli Lilly and Company | LLY | 9.31 |
| Bristol-Myers Squibb Company | BMY | 9.30 |
| Qualcomm | QCOM | 8.81 |
| Ford Motor Company | F | 8.24 |
| Alibaba Group Holding Limited | BABA | 7.96 |
| Bosch | Private | 7.93 |
| Toyota Motor Corporation | TM | 7.76 |
| GSK | GSK | 7.74 |
| AbbVie | ABBV | 7.68 |
| Cisco Systems, Inc. | CSCO | 7.55 |
| Sanofi | SNY | 7.28 |
The only other non-tech company outside of Merck included in the top 10 was Volkswagen AG, whose R&D spending in 2023 was $23.581 billion with a substantial portion of that supporting electrification and digitalization efforts. In recent years, the company has invested heavily in battery production and raw material sourcing to reduce EV costs and protect its market share. VW announced in March 2023 that it would spend €180 billion ($193 billion) over the next five years in with two-thirds dedicated to electrification and digitization. While transitioning to EVs, VW continues to invest in internal combustion engine technology, spending roughly €60 billion ($65 billion) to maintain its competitiveness in this sector.
While only Merck & Co. made the top 10, pharma companies are heavily investing in R&D, particularly in areas like AI-driven drug discovery, personalized medicine, and gene therapy.
Johnson & Johnson spent $15.1 billion on R&D in 2023 across its pharma and mtech divisions. That sum translated to nearly 18% of 2023 sales, representing a record for the company. Examples of projects receiving funding include a variety of drug candidates such as milvexian and TAR-200, precision medicine initiatives and medical device innovation (e.g., ETHIZIA Hemostatic Sealing Patch and Biosense Webster QDOT MICRO Catheter).
Can you explain the source of the R&D figure for Amazon, please? The 2023 annual report lists $85,622 for “Technology and Infrastructure,” which appears related but not identical to R&D–the reason Amazon is not included in the EU Scoreboard. The figure you state ($78,240) does not appear in the annual report or 10K, but is close to the previous year’s reported “Technology and Infrastructure” expense.
Hi Michael,
Just seeing your message, but I had updated recently corrected the R&D figure for Amazon, which as you note is described as “Technology and Infrastructure.” It now reflects the $85.622B figure.
As for the categorization, this is something I am open to feedback on given the challenges of finding out precisely how this category is allocated. In one 10-k report a few years ago, they termed the spending “Technology and content.” While some of this is applicable to R&D – developing new AI models, cashier-less check out systems, new AWS offerings, etc., some of it is related to Prime Video content and other miscellany.
Have noted similar issues when reviewing pharma companies’ R&D figures — some have counted prominent acquisitions as R&D (Prometheus being one example) while others haven’t.
You invest in R&D, you get profitable growth, or excellent competitive barriers.
– that’s the takeaways from the examples.
Our companies in Finland don’t invest substantial amounts in R&D and that’s why they haven’t had growth – with cost cuttings they have, though, managed to get old and mature businesses perform reasonably well on the profitability side without growth, but the share market has been on the 10000 points for a decade, so the investors haven’t liked the management style of those companies.
I often wonder how would one get Finnish companies to invest in R&D properly, meaning sums which can make a difference. Finnish Top -500 companies make a turnover of some 450 blnEUR, but they invest in R&D only a bit more than 4 bln.
These examples you highlight are of great learning value, but the Finnish companies do not want to learn from the examples for reasons totally unknown to me and common sense.
How would you “approach the bench”? How would you change this stubborn attitude towards R&D?
This is an excellent question, and one that deserves a deep analysis. As you say, investing in R&D properly is key, but there is a whole lot of nuance and context about what that means given the industry you are in, and how you define R&D spending in the first place, which in some contexts includes licensing deals, acquisitions, and other non-lab / tangible research work items.
Ultimately, it boils down to show that your R&D dollar yields an ROI — but that can be tricky to do. In some of the data I’ve explored, there is a general trend that the quality of research matters much more than the quantity of it. For instance, an organization might do a lot of novel research and publish it widely in obscure journals or win patents that are not super-innnovative and see their revenue growth dip. Or, on the other hand, an organization might not even patent at all and have an innovative trade-secret-protected research process that results in a huge amount of growth. We have an annual report covering some of these themes known as the Global Funding Forecast, which I am to improve in 2025 so that it offers more actionable takeaways. If you have input or questions in terms of what you would like to see in it, don’t hesitate to reach out to me.