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Apple announces gigantic $110 billion buyback program, largest in U.S. history

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Apple has announced a record $110 billion stock buyback program as the Cupertino company reported quarterly results that beat low expectations. The buyback beats the previous record set by Apple itself at $100 billion back in 2018. That makes it the largest-ever buyback program announced by a company in the United States.

In a buyback program, a company purchases its own outstanding shares from the open market or shareholders. Companies usually use this strategy to reduce the number of available shares, increasing the value of the remaining shares for existing shareholders. A buyback also increases Earnings Per Share (EPS)— even without the company truly increasing its actual earnings.

CEO Tim Cook told Reuters that Apple expects to grow low-single digits in overall revenue in the current quarter.

For the March quarter, however, Apple reported a huge amount of cash and cash equivalents of $32,695 million as of March 30, 2024. Apple's retained earnings are also $4,339 million during the same period. Buybacks usually signal to the market that the company feels that its stock might be undervalued. By utilizing its cash reserves and retained earnings, Apple can make its stock more attractive to existing investors, boosting confidence and supporting the stock price.

Apple's stock has been on a steady decline, as much as 10% between 2023 and 2024. This could be due to weaker iPhone sales globally, as well as the company's struggle with competition in China.

Apple has also been relatively quiet about its AI plans when compared to rivals like Microsoft and Google, both of which are heavily investing. Despite this, Cook stated to Reuters that Apple has increased its R&D spending significantly and has allocated over $100 billion towards AI R&D in the last five years.

We're expecting more updates from Apple through its May 7 press event where the company will reveal new OLED iPad Pro and iPad Air. In an interview with CNBC, Cook said that the event will feature some news from an "AI point of view".

Via Reuters

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