Amazon and Google Do One Thing Bigger Than Everyone Else
Amazon.com Inc., and Alphabet Inc. R&D
Preface
While Amazon.com Inc. (NASDAQ:AMZN) and Alphabet Inc. (NASDAQ:GOOGL) are two of the five mega cap technology firms leading the future of innovation, these two have one thing in common that the others do not. They spend more on research and development than any other firms in any other industries in the world.
AMAZON.COM INC (NASDAQ:AMZN)
Let's start with a chart of Amazon.com and the company's research and development rolled into trailing twelve month periods, through time.
Amazon.com research and development now stands at a staggering $13.3 billion in the last year. That's up 33% from $10 billion last year and about 85% from $7.1 billion two-years ago. Now let's turn to its peer.
ALPHABET INC. (NASDAQ:GOOGL)
We'll look at the same chart, but this time for Alphabet.
Alphabet's research and development over the trailing-twelve-months stands at $12.9 billion, up from $10.5 billion one-year ago and $7.6 billion two-years ago.
While these two charts are pretty, they need context, and it's the context that reveals the great similarity
CONTEXT
If we plot research and development expense (TTM) for all companies in all sectors over $75 billion in market cap and then rank them on the y-axis, we end up with this startling image.
And now we see the payoff. Amazon.com and Alphabet spend more in research and development than any other companies spanning all other industries. We can see Microsoft, Intel and Apple for the tech giants, and then we can see the Johnson & Johnson as the first non-technology name that makes it onto the chart.
When it comes down to it, Amazon.com and Alphabet spend a breathtaking amount on research and development and it's these two firms that will likely lead the technology revolution forward, monetizing that expense through innovation.
WHY THIS MATTERS
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