Apple Had the Cash to Buy Any of 486 S&P 500 Companies, but Tim Cook Bet $851 Billion on This Instead
Key Points
Despite the company largely staying out of the AI race, Apple stock has performed well in 2026, continuing its long winning streak.
Much of the company's incredible earnings power has been directed toward share repurchases.
Incoming CEO John Ternus should maintain this capital allocation policy that was established under Tim Cook’s leadership.
The artificial intelligence (AI) boom continues to grab the lion's share of the market's attention. Businesses that have jumped into the trend with both feet have seen their shares perform well as investors gravitated to this trade.
Apple (NASDAQ: AAPL) has largely sat on the sidelines in this race, however, avoiding the massive spending activity of its peers. That doesn't mean it has been a slouch in terms of share price performance, though. The Magnificent Seven stock is up 22% in 2026 (as of July 16), and it has skyrocketed by 1,250% over the past 10 years.
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Few companies can match Apple's incredible profitability. And the market fully appreciates how incredibly sound this dominant consumer technology business is from a financial perspective.
The company has raked in a remarkable amount of cash over the years, and the options it had for putting that money to work were almost limitless. However, over the course of his tenure as CEO, Tim Cook committed $851 billion of it to one specific priority, and that choice has benefited Apple shareholders tremendously.
Image source: The Motley Fool.
The best investment is in the mirror
In 2012, Apple's board of directors instituted a new capital allocation policy, authorizing a $10 billion share repurchase program, set to start in its fiscal 2013. This decision, which was certainly supported by the business's notable success at that point, came after Cook took the top job at Apple.
The company has continued to regularly put funds into its stock buybacks in the years since. In fact, in just the last two reported quarters, Apple spent $36 billion on stock buybacks. Clearly, the pace of those repurchases has increased dramatically over the years.
Not all businesses can do this. Apple sells some of the most popular consumer hardware and software out there, supporting a robust ecosystem that powers its brand recognition. It booked $71.7 billion in net income in the last six months.
Since it started the program more than 14 years ago, Apple's stock repurchase activity has totaled a mind-boggling $851 billion. With that much money (or a fraction of it), it could have paid cash to acquire any one of 486 companies in the S&P 500 index, based on their current market capitalizations. That's a long list of large caps that includes many high-quality names.
Instead, Apple essentially chose to invest in itself and in rewarding its shareholders. Companies that repurchase their own shares do so at the expense of other uses of capital such as investing in growth opportunities and infrastructure, acquisitions, paying down debt, or paying dividends. Apple engages in all of these behaviors, too, but its board apparently believes that share repurchases are one of the best uses for its cash.
Certainly the business has prospered. From its fiscal 2012 to fiscal 2025, Apple's net income soared 169%. But thanks to stock buybacks that drastically reduced the outstanding share count by more than 40%, the company's diluted earnings per share were up an impressive 373% during that 13-year period.
Looking ahead, investors should expect this capital allocation policy to remain intact, even after John Ternus replaces Tim Cook as CEO in September.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.