The other day, I remarked that it was possible that Apple’s R&D budget for 2025 equaled the entire R&D budget for tech in 1980. At the time, I thought I was exaggerating, but I then asked Gemini (see below) to go do some research, and what I uncovered was that I was not.

When looking at the current technology trends and moat of a company like Anthropic or OpenAI or any of the AI vendors, it’s easy to assume that they have a very large moat. The problem, though, is a moat is a function of money and resources, and the scale of the resources necessary to turn a scale-up problem into a scale-out problem is staggering.

But when you think about the total amount of dollars that exist in engineering investment and the willingness of pretty much everybody to throw whatever it takes to solve the problem, you realize that it becomes entirely possible to turn what should’ve been a 40-year problem, namely how do we go from scale-up AI to scale-out AI, to a four to five-year problem, and that’s what we’re seeing. Effectively, we’re seeing the attack of scale-out that took 40 years to complete, taking less than five.

What that tells you is that the era of the frontier models may be coming to a premature close. I don’t begrudge the end of that era because as the investment increases and the scale-out increases, the value declines. So, do I think it’ll go to zero? No, but I don’t think it will be where the action is in a year or so.

Here is the budget analysis from Gemini

Comparing tech-only R&D in 1980 to Apple’s 2025 R&D budget makes the contrast even more stark.

Apple’s FY2025 R&D spend was $34.55 billion.

In 1980, total U.S. industrial R&D in the technology sector—which encompassed information technology, mainframe/minicomputers, semiconductors, telecommunications, and office equipment—was roughly $8 billion to $12 billion in nominal terms.

Apple alone in 2025 spent 3 to 4 times the nominal total R&D budget of the entire 1980 tech industry.

Nominal vs. Inflation-Adjusted Comparison

Perspective1980 Total Tech R&DApple FY2025 R&DTakeaway Nominal Dollars~$8 billion – $12 billion$34.55 billionApple’s budget today is 3x–4x larger in raw dollars. Real (2025) Dollars~$32 billion – $48 billion$34.55 billionApple’s single budget roughly matches the purchasing power of the entire 1980 tech sector.

Key Historical Drivers

• Fewer, smaller players in 1980: In 1980, industrial tech R&D was dominated by a few giants (IBM, AT&T Bell Labs, Texas Instruments, Xerox PARC). Even IBM—the undisputed titan of the era—spent roughly $1.5 billion on R&D in 1980.
• Apple’s current scale: Apple’s $34.55 billion budget is driven by proprietary silicon, AI infrastructure, custom displays, sensors, and operating systems—demonstrating how single mega-cap tech firms today deploy capital at a scale that exceeds entire national industries four decades ago.