While other Magnificent Seven members pour billions into artificial intelligence initiatives, Apple is holding back. Its free cash flow is fueling the tech industry’s largest buybacks program.
The spending disparity, apparent in Apple’s Thursday earnings release for the three months through September, the final quarter of its fiscal year, is a bullish development for shareholders.
Apple laid out $12.7 billion in capital expenditures in the entire year, far from the amounts companies such as Meta Platforms, Alphabet, and Microsoft have spent. It is working to develop AI for the iPhone and other services, but it isn’t paying for a vast buildout of data centers, as its rivals are.
Meta Platforms expects about $71 billion in capital expenditures this year and more in 2026. Alphabet has said it expects about $92 billion in capital spending in 2025 and Amazon.com plunked down a cool $120 billion in the year through September.
Apple, meanwhile, continues to snap up its own stock. It bought back about $20 billion in the quarter and $91 billion for the latest fiscal year, little changed from the $95 billion in fiscal 2024.
Meta’s buybacks in the latest quarter totaled $3 billion, down from $8 billion in the year-earlier period.
MacDailyNews Take: Apple CFO Kevan Parekh during yesterday’s Q425 conference call with analysts said:
We ended the quarter with $132,000,000,000 in cash and marketable securities. We had $1,300,000,000 of debt maturities and decreased commercial paper by 1,900,000,000 resulting in $99,000,000,000 in total debt. Therefore, at the end of the quarter, net cash was $34,000,000,000 During the quarter, we returned $24,000,000,000 to shareholders. This included $3,900,000,000 in dividends and equivalents and $20,000,000,000 through open market repurchases of 89,000,000 Apple shares…
We are expecting increases in our CapEx spending related to AI investments. For example, as I mentioned earlier, we did end up having investments this year to build out our private cloud compute environment. And we do believe this hybrid model has served us very well, and we continue to want to leverage it. And so I don’t see us moving away from this hybrid model where we leverage both first party capacity as well as leverage third party capacity. We’ll continue to want to build out private cloud compute, as Tim [Cook] outlined, as we have more usage there over time. But I think, in general, we want to continue to have this hybrid model.
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Apparently, Wall Street prefers companies that are heavily spending on A.I. infrastructure rather than buybacks. Greed based on A.I.’s supposedly glorious future seems more important to investors.
Buybacks are nice, but I would like to see Apple use some of that money to do other things. How about a new Time Capsule wireless router? Surely that would be a product most Apple computer users would instantly find useful. Some people had mentioned a revival of the iPod. Amazon is selling plenty of high-end audio players, so I think that market could be useful to Apple.
I’m not complaining, I’m just saying that there are other things Apple could do with at least some of that buyback cash.
Your suggestion for Apple in 2025….is local storage and iPods? Cloud backups and iPhones already exist….
Which Costco did you say you are working at?