Apple Plows Money Into Buybacks. Its Rivals Are Spending on Data Centers.

Apple is working to develop AI for the iPhone and other services, but it isn’t paying for a vast buildout of data centers. (Michael M. Santiago/Getty Images)

Key Points

• Apple had $12.7 billion in capital expenditures for the entire year, significantly less than other major tech companies.
• Apple repurchased approximately $20 billion in stock during the quarter and $91 billion for the latest fiscal year.
• Apple’s CFO stated the company anticipates increased capital expenditure for AI investments, but didn’t provide a specific amount.

While other members of the Magnificent Seven spend enormous amounts of money on their artificial-intelligence initiatives, Apple is holding back. Its free cash flow is going into the tech industry’s biggest share-repurchase 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.

The heavy capital expenditures are pressuring free cash flow at several of the Mag Seven companies, leaving them less room to offer ample capital returns to shareholders.

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. Its cash holdings have fallen 40% to $44 billion since the start of the year.

Apple management was asked about the capex outlook on its earnings conference call late Thursday.

An analyst asked: “In the wake of nearly every other large tech company massively increasing their capex in advance of AI demand, and also mentioning that there is scarce capacity, do you anticipate Apple altering its sort of longstanding hybrid approach to your own and third-party data centers?”

Apple CFO Kevan Parekh responded that Apple’s hybrid approach wouldn’t change and that the company is “expecting increases in our CapEx spending related to AI investments” without quantifying the amount.

That should leave plenty of cash for stock repurchases in the coming year.

While Apple buys back a lot of stock, its buyback “yield”—repurchases divided by its market capitalization—is still small at about 2.5%, compared with 5% or so at some big banks.

That is partly a function of the company’s lofty stock price and valuation. The shares are valued at about 34 times projected fiscal 2026 earnings, compared with 22 times for the S&P 500.

The company offers a dividend yield of under 0.5%

Apple stock, which traded as much as 3% higher in after-hours trading following the earnings release late Thursday, was down 0.5% to $270 on Friday.

Write to Andrew Bary at andrew.bary@barrons.com