America’s tech titans are lining up to make a record $500 billion war chest available for stock buybacks this year by taking advantage of robust cash levels and supportive market conditions. Apple, Microsoft, Alphabet, Meta and Amazon – collectively holding in excess of $600 billion of cash – are spearheading the record return of capital to investors as growth investment decelerates.
The buyback frenzy occurs despite political criticism, with technology leaders contending repurchases are the best use of capital in the face of economic uncertainty. Apple alone is responsible for almost a quarter of the proposed buybacks, having already authorized $110 billion of repurchases this year – the biggest corporate authorization in history.
Analysts say the move indicates a maturing industry moving from hyper-growth to value maximization. “These companies are producing cash quicker than they can invest it,” says Bernstein tech strategist Mark Li. The buybacks are also a defensive strategy, prop up share prices during market volatility without resorting to expensive acquisitions.
The buyback binge is again sparking arguments over corporate priorities, with critics pointing out the money could be spent on R&D or employee wages. But with tech shares still under 2021 highs, investors are applauding the cash returns – staging what could become the biggest single-year buyback total on record.
By the Numbers:
• $500B = Total buyback firepower of the top 10 tech companies
• Apple’s $110B program would be able to retire 4% of shares outstanding
• Repurchases now account for 65% of tech cash utilization vs. 45% pre-pandemic
• Industry’s cash hoard up 18% YoY amidst economic challenges
• Tax benefit: Buybacks are subject to 1% excise tax vs. higher rate for dividends
