diff --git a/.gitignore b/.gitignore
index c038b66451ca..fb4cf85ce7be 100644
--- a/.gitignore
+++ b/.gitignore
@@ -38,6 +38,7 @@ packages/server/test/support/fixtures/server/libs
 # from npm/react
 /npm/react/bin/*
 /npm/react/cypress/videos
+/npm/react/.babel-cache
 
 # from runner-ct
 /packages/runner-ct/cypress/screenshots
diff --git a/circle.yml b/circle.yml
index df4f66de3d27..d3d3e7f15e3b 100644
--- a/circle.yml
+++ b/circle.yml
@@ -1086,6 +1086,9 @@ jobs:
       - attach_workspace:
           at: ~/
       - check-conditional-ci
+      - restore_cache:
+          name: Restore yarn cache
+          key: v{{ .Environment.CACHE_VERSION }}-{{ arch }}-npm-react-babel-cache
       - run:
           name: Build
           command: yarn workspace @cypress/react build
@@ -1093,6 +1096,11 @@ jobs:
           name: Run tests
           command: yarn workspace @cypress/react test
       - store-npm-logs
+      - save_cache:
+          name: Save Cache
+          key: v{{ .Environment.CACHE_VERSION }}-{{ arch }}-npm-react-babel-cache
+          paths:
+            - cypress/npm/react/.babel-cache
       - persist_to_workspace:
           root: ~/
           paths: cypress/npm/react
diff --git a/cli/types/cypress.d.ts b/cli/types/cypress.d.ts
index 55cb1924ed9a..2af83a2e8e67 100644
--- a/cli/types/cypress.d.ts
+++ b/cli/types/cypress.d.ts
@@ -5134,11 +5134,7 @@ declare namespace Cypress {
 
   interface DevServerOptions {
     specs: Spec[]
-    config: {
-      supportFile?: string
-      projectRoot: string
-      webpackDevServerPublicPathRoute: string
-    },
+    config: ResolvedConfigOptions & RuntimeConfigOptions,
     devServerEvents: NodeJS.EventEmitter,
   }
 
diff --git a/npm/react/cypress/plugins/index.js b/npm/react/cypress/plugins/index.js
index 06bea18ed664..fb10532a5a13 100644
--- a/npm/react/cypress/plugins/index.js
+++ b/npm/react/cypress/plugins/index.js
@@ -1,4 +1,6 @@
+// @ts-check
 const { startDevServer } = require('@cypress/webpack-dev-server')
+const path = require('path')
 const babelConfig = require('../../babel.config.js')
 
 /** @type import("webpack").Configuration */
@@ -17,7 +19,7 @@ const webpackConfig = {
       {
         test: /\.(js|jsx|mjs|ts|tsx)$/,
         loader: 'babel-loader',
-        options: babelConfig,
+        options: { ...babelConfig, cacheDirectory: path.resolve(__dirname, '..', '..', '.babel-cache') },
       },
       {
         test: /\.modules\.css$/i,
@@ -59,7 +61,7 @@ const webpackConfig = {
  * @type Cypress.PluginConfig
  */
 module.exports = (on, config) => {
-  on('dev-server:start', (options) => startDevServer({ options, webpackConfig }))
+  on('dev-server:start', (options) => startDevServer({ options, webpackConfig, disableLazyCompilation: false }))
 
   return config
 }
diff --git a/npm/webpack-dev-server/package.json b/npm/webpack-dev-server/package.json
index 15cfed5da1c4..92c08d693980 100644
--- a/npm/webpack-dev-server/package.json
+++ b/npm/webpack-dev-server/package.json
@@ -11,6 +11,7 @@
   },
   "dependencies": {
     "debug": "4.3.2",
+    "lazy-compile-webpack-plugin": "0.1.11",
     "semver": "^7.3.4",
     "webpack-merge": "^5.4.0"
   },
diff --git a/npm/webpack-dev-server/src/index.ts b/npm/webpack-dev-server/src/index.ts
index 8a4a2f8773c7..85069652e489 100644
--- a/npm/webpack-dev-server/src/index.ts
+++ b/npm/webpack-dev-server/src/index.ts
@@ -1,18 +1,9 @@
-import { EventEmitter } from 'events'
 import { debug as debugFn } from 'debug'
 import { AddressInfo } from 'net'
 import { start as createDevServer } from './startServer'
-const debug = debugFn('cypress:webpack-dev-server:webpack')
+import { UserWebpackDevServerOptions } from './makeWebpackConfig'
 
-export interface DevServerOptions {
-  specs: Cypress.Cypress['spec'][]
-  config: {
-    supportFile: string
-    projectRoot: string
-    webpackDevServerPublicPathRoute: string
-  }
-  devServerEvents: EventEmitter
-}
+const debug = debugFn('cypress:webpack-dev-server:webpack')
 
 type DoneCallback = () => unknown
 
@@ -21,9 +12,9 @@ export interface ResolvedDevServerConfig {
   close: (done?: DoneCallback) => void
 }
 
-export interface StartDevServer {
+export interface StartDevServer extends UserWebpackDevServerOptions {
   /* this is the Cypress options object */
-  options: DevServerOptions
+  options: Cypress.DevServerOptions
   /* support passing a path to the user's webpack config */
   webpackConfig?: Record<string, any>
 }
diff --git a/npm/webpack-dev-server/src/makeWebpackConfig.ts b/npm/webpack-dev-server/src/makeWebpackConfig.ts
index 8cef9c6bafc4..06efdfa3dd2e 100644
--- a/npm/webpack-dev-server/src/makeWebpackConfig.ts
+++ b/npm/webpack-dev-server/src/makeWebpackConfig.ts
@@ -1,28 +1,51 @@
 import { debug as debugFn } from 'debug'
 import * as path from 'path'
-import { Configuration } from 'webpack'
+import * as webpack from 'webpack'
 import { merge } from 'webpack-merge'
+import defaultWebpackConfig from './webpack.config'
+import LazyCompilePlugin from 'lazy-compile-webpack-plugin'
 import CypressCTOptionsPlugin, { CypressCTOptionsPluginOptions } from './plugin'
 
 const debug = debugFn('cypress:webpack-dev-server:makeWebpackConfig')
+const WEBPACK_MAJOR_VERSION = Number(webpack.version.split('.')[0])
+
+export interface UserWebpackDevServerOptions {
+  /**
+   * if `true` will compile all the specs together when the first one is request and can slow up initial build time.
+   * @default false
+  */
+  disableLazyCompilation?: boolean
+}
+
+interface MakeWebpackConfigOptions extends CypressCTOptionsPluginOptions, UserWebpackDevServerOptions {
+  webpackDevServerPublicPathRoute: string
+  isOpenMode: boolean
+}
 
 const mergePublicPath = (baseValue, userValue = '/') => {
   return path.join(baseValue, userValue, '/')
 }
 
-interface MakeWebpackConfigOptions extends CypressCTOptionsPluginOptions {
-  webpackDevServerPublicPathRoute: string
+function getLazyCompilationWebpackConfig (options: MakeWebpackConfigOptions): webpack.Configuration {
+  if (options.disableLazyCompilation || !options.isOpenMode) {
+    return {}
+  }
+
+  switch (WEBPACK_MAJOR_VERSION) {
+    case 4:
+      return { plugins: [new LazyCompilePlugin()] }
+    case 5:
+      return { experiments: { lazyCompilation: true } } as webpack.Configuration
+    default:
+      return { }
+  }
 }
 
-export async function makeWebpackConfig (userWebpackConfig: Configuration, options: MakeWebpackConfigOptions): Promise<Configuration> {
+export async function makeWebpackConfig (userWebpackConfig: webpack.Configuration, options: MakeWebpackConfigOptions): Promise<webpack.Configuration> {
   const { projectRoot, webpackDevServerPublicPathRoute, files, supportFile, devServerEvents } = options
 
   debug(`User passed in webpack config with values %o`, userWebpackConfig)
 
-  const defaultWebpackConfig = require('./webpack.config')
-
-  debug(`Merging Evergreen's webpack config with users'`)
-
   debug(`New webpack entries %o`, files)
   debug(`Project root`, projectRoot)
   debug(`Support file`, supportFile)
@@ -45,7 +68,12 @@ export async function makeWebpackConfig (userWebpackConfig: Configuration, optio
     ],
   }
 
-  const mergedConfig = merge<Configuration>(userWebpackConfig, defaultWebpackConfig, dynamicWebpackConfig)
+  const mergedConfig = merge<webpack.Configuration>(
+    userWebpackConfig,
+    defaultWebpackConfig,
+    dynamicWebpackConfig,
+    getLazyCompilationWebpackConfig(options),
+  )
 
   mergedConfig.entry = entry
 
diff --git a/npm/webpack-dev-server/src/startServer.ts b/npm/webpack-dev-server/src/startServer.ts
index 9863dac3c96e..dbab4f0f05b3 100644
--- a/npm/webpack-dev-server/src/startServer.ts
+++ b/npm/webpack-dev-server/src/startServer.ts
@@ -6,19 +6,22 @@ import { makeWebpackConfig } from './makeWebpackConfig'
 
 const debug = Debug('cypress:webpack-dev-server:start')
 
-export async function start ({ webpackConfig: userWebpackConfig, options }: StartDevServer): Promise<WebpackDevServer> {
+export async function start ({ webpackConfig: userWebpackConfig, options, ...userOptions }: StartDevServer): Promise<WebpackDevServer> {
   if (!userWebpackConfig) {
     debug('User did not pass in any webpack configuration')
   }
 
-  const { projectRoot, webpackDevServerPublicPathRoute } = options.config
+  // @ts-expect-error ?? webpackDevServerPublicPathRoute is not a valid option of Cypress.Config
+  const { projectRoot, webpackDevServerPublicPathRoute, isTextTerminal } = options.config
 
   const webpackConfig = await makeWebpackConfig(userWebpackConfig || {}, {
     files: options.specs,
     projectRoot,
     webpackDevServerPublicPathRoute,
     devServerEvents: options.devServerEvents,
-    supportFile: options.config.supportFile,
+    supportFile: options.config.supportFile as string,
+    isOpenMode: !isTextTerminal,
+    ...userOptions,
   })
 
   debug('compiling webpack')
diff --git a/npm/webpack-dev-server/src/webpack.config.js b/npm/webpack-dev-server/src/webpack.config.js
index 1f2eef5d09d2..968bec6c5311 100644
--- a/npm/webpack-dev-server/src/webpack.config.js
+++ b/npm/webpack-dev-server/src/webpack.config.js
@@ -1,6 +1,7 @@
 const path = require('path')
 const HtmlWebpackPlugin = require('html-webpack-plugin')
 
+/** @type {import('webpack').Configuration} */
 module.exports = {
   mode: 'development',
   optimization: {
diff --git a/npm/webpack-dev-server/test/e2e.spec.ts b/npm/webpack-dev-server/test/e2e.spec.ts
index b74be273940e..7260b241566c 100644
--- a/npm/webpack-dev-server/test/e2e.spec.ts
+++ b/npm/webpack-dev-server/test/e2e.spec.ts
@@ -51,8 +51,9 @@ const specs: Cypress.Cypress['spec'][] = [
 const config = {
   projectRoot: root,
   supportFile: '',
+  isTextTerminal: true,
   webpackDevServerPublicPathRoute: root,
-}
+} as any as Cypress.ResolvedConfigOptions & Cypress.RuntimeConfigOptions
 
 describe('#startDevServer', () => {
   it('serves specs via a webpack dev server', async () => {
diff --git a/yarn.lock b/yarn.lock
index 28c5332d0349..a24e04c8632f 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -13421,7 +13421,7 @@ detect-node@^2.0.4:
   resolved "https://registry.yarnpkg.com/detect-node/-/detect-node-2.0.4.tgz#014ee8f8f669c5c58023da64b8179c083a28c46c"
   integrity sha512-ZIzRpLJrOj7jjP2miAtgqIfmzbxa4ZOr5jJc601zklsfEx9oTzmmj2nVpIPRpNlRTIh8lc1kyViIY7BWSGNmKw==
 
-detect-port-alt@1.1.6:
+detect-port-alt@1.1.6, detect-port-alt@^1.1.6:
   version "1.1.6"
   resolved "https://registry.yarnpkg.com/detect-port-alt/-/detect-port-alt-1.1.6.tgz#24707deabe932d4a3cf621302027c2b266568275"
   integrity sha512-5tQykt+LqfJFBEYaDITx7S7cR7mJ/zQmLXZ2qt5w04ainYZw6tBf9dBunMjVeVOdYVRUzUOE4HkY5J7+uttb5Q==
@@ -21463,6 +21463,14 @@ lazy-cache@^1.0.3:
   resolved "https://registry.yarnpkg.com/lazy-cache/-/lazy-cache-1.0.4.tgz#a1d78fc3a50474cb80845d3b3b6e1da49a446e8e"
   integrity sha1-odePw6UEdMuAhF07O24dpJpEbo4=
 
+lazy-compile-webpack-plugin@0.1.11:
+  version "0.1.11"
+  resolved "https://registry.yarnpkg.com/lazy-compile-webpack-plugin/-/lazy-compile-webpack-plugin-0.1.11.tgz#be3b9487ccc731a606dc55bcfcd80000c72e4237"
+  integrity sha512-d2D72x0XqFSj83SRmgx1dvgRvmyIoXpC2lMj+XVS+xzt0FxXDPzF/2FbxOVmW9gzp6d8U29Ne4RGF4x+MTYwow==
+  dependencies:
+    detect-port-alt "^1.1.6"
+    loader-utils "^1.2.3"
+
 lazy-property@~1.0.0:
   version "1.0.0"
   resolved "https://registry.yarnpkg.com/lazy-property/-/lazy-property-1.0.0.tgz#84ddc4b370679ba8bd4cdcfa4c06b43d57111147"