Cash-rich Apple to earn $4 billion more on its cash by 2023 thanks to higher interest rates

With its enormous cash reserves now earning next to nothing, Apple could be one of the bigger corporate beneficiaries of the Federal Reserve’s expected moves to raise short-term interest rates to about 2% by year-end.

Cash-rich Apple to earn $4 billion more on its cash by 2023 thanks to higher interest rates

Andrew Bary for Barron’s:

[Berkshire Hathaway’s] earnings in 2023 could rise about 8% simply from the higher yields on its cash, Barron’s estimates.

Other big companies that should gain are cash-rich Apple and Alphabet . Apple had $203 billion of cash and equivalents at year-end 2021, and Alphabet was sitting on $139 billion.

Apple could be earning $4 billion more on its cash by 2023 and Alphabet nearly $3 billion. Higher interest income could boost Apple’s net income by about 3% next year, and Alphabet’s earnings may get a 4% lift… With Federal Reserve monetary policy makers anticipating that the benchmark federal-funds rates will be about 2% by year-end and moving toward 2.5% or higher in 2023, Berkshire stands to earn $3 billion or more on its cash in 2023.

MacDailyNews Take: Cash could be looking a bit less trashy with each rate hike.

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  1. More than offset by lost in value of those dollars “in the bank” due to inflation. Better for Apple to acquire assets wisely, as opportunities arise in down economy and stock market. With current Big Gov plans for even more spending, high inflation is likely to persist.

    1. That’s not correct. Equities don’t devalue with inflation because they are able to adjust Opex-COGS-easy to converts while favorably locked into hard to converts. Unfortunately Inflation is pernicious for the individual most especially those with low liquid value.
      I don’t necessarily think this is fair or how it should work but Apple has been issuing many tens of billions in bonds at mind numbingly low rates. As rates rise this is free money for Apple. An amount that would be a very substantial amount of earnings for most companies (those not named Apple or Google or Microsoft etc).

    1. Currency devaluation with respect to what other currencies?

      The only way for the world to rid itself of money valuation ebbs and flows would be to adopt one global currency. The ultranationalist sect here would never go for that, but they do love to whine about their distorted impressions of the value of everything.

  2. That’s nice. Apple shareholders will likely see a higher share repurchase amount as Apple isn’t going to spring for any higher dividend increase than usual ($0.08). I’m not complaining as Apple is being affected by the current world economy and not because Apple isn’t doing well in its business. I think we’ll be lucky to see $182 by July or August.

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