Assessing Apple's $110 Billion Stock Buyback: Should You Invest?

Sunday, 12 May 2024, 23:09

Apple's recent $110 billion stock buyback authorization is making headlines as the largest in U.S. history. While stock buybacks can signal undervaluation and boost EPS, concerns arise over Apple's stagnant revenue growth and declining sales in China. With a high P/E ratio and unclear AI strategy, the decision to invest in Apple may not be a wise move for growth investors.
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Assessing Apple's $110 Billion Stock Buyback: Should You Invest?

Stock Buybacks are Great

The chart below shows Apple's impressive history of returning capital to investors through stock buybacks:

AAPL Stock Buybacks (Quarterly) data by YCharts.

Management often repurchases stock to indicate undervaluation and enhance EPS.

But Where is Apple's Real Growth Coming From?

Apple has been facing consecutive quarters of negative revenue growth, primarily due to challenges in China. Declining revenue in China and a lack of developments in AI may hinder Apple's future earnings power.

Look at the Valuation

Despite a high P/E ratio and lagging innovation in AI compared to peers, Apple's buyback plan could be a distraction from its revenue decline and strategic uncertainty.

Considering these factors, investing in Apple at its current valuation might not be favorable for growth investors.


This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


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