Tech companies spend billions of dollars on research and development annually. On average, the technology industry spends 10% of its revenues on R&D. The two biggest areas of R&D investments currently are in Artificial Intelligence and Virtual Reality. However, the correlation between R&D spending and innovation is not clear as success is not guaranteed. Companies need to strike the right balance between retaining profits and R&D spend to increase confidence amongst its shareholders. Hence, R&D spending alone is a bad predictor of future stock performance.