The reshoring of manufacturing to North America is becoming a huge theme throughout corporate America. Whether their management teams are acting to avoid the impact of tariffs or because it makes sense to them on broader business and geopolitical levels, numerous companies recently made major announcements about their plans to invest domestically.
Tech giant Apple (AAPL 1.93%) put out perhaps the largest number so far when it announced that it plans to spend $500 billion in the United States over the next four years. But does that enormous planned outlay make Apple stock a buy today?
$500 billion in spending, not in capital expenditures
Apple is one of the largest companies in the world by revenue. It generated close to $400 billion in sales in 2024 alone. However, it does not manufacture and assemble most of its computing hardware. It outsources that part of the operation to contractors such as Foxconn.
This may start to change in the next few years. As a part of its $500 billion spending plan, Apple will invest in advanced manufacturing, artificial intelligence, and silicon engineering (meaning computer chips) in the United States. For example, it plans to contract for significant manufacturing capacity at newly built chip factories in the United States, including the massive new facility Taiwan Semiconductor Manufacturing is constructing in Arizona, where Apple will be the largest customer.
While this $500 billion figure may seem like a large number, it is not an apples-to-apples comparison to the other big tech sector announcements. Cloud computing players and artificial intelligence (AI) companies such as Microsoft have revealed their own plans to lay out tens of billions of dollars on capital expenditures. However, Apple's announcement is for $500 billion in total spending over four years, and it includes much more than just capital expenditures. All this to say, Apple is not spending boatloads more than its big tech peers on new infrastructure.
In fact, it is likely spending much less. For example, looking at Amazon's 2024 results, its total expenses were $569 billion just for the year. Some of this spending was international, but the company may spend close to $500 billion in a single year in the United States.
Apple may have trumpeted a large number in its press release, but that doesn't necessarily mean it's making a big change to its business model or its strategy. In April 2021, it announced a similarly large four-year, $430 billion investment into the United States.
NASDAQ: AAPL
Key Data Points
When will Apple release its next game-changing hardware?
This $500 billion spending plan doesn't change much for Apple. More important will be its upcoming lineup of hardware offerings, including the latest iPhones. For many years now, Apple has ridden on the back of the smartphone golden goose, sales of which still provide a majority of its revenue. Sure, the company has seen success with its Apple Watch and AirPods, but these are don't move the needle much because Apple's business operates at such a large size.
What investors need to focus on is what might come after the iPhone. A new flagship hardware device from Apple could be the way the company gets back to growth again, as it will take a lot of new revenue to make a dent in Apple's nearly $400 billion revenue level.
Some might have thought that the new device arrived last year with the Apple Vision Pro, although it now looks like a flop and may wind up being discontinued. For years, rumor had it that Apple was working on an electric self-driving vehicle, but that project was reportedly scrapped in 2024.
So it is unclear what might be Apple's next breakout device. For the time being, the company still relies heavily on the mature iPhone segment.
AAPL PE Ratio data by YCharts.
Don't invest based on press releases
There is a lot of excitement around technology companies, AI, and business in general in America at the moment. Investors should temper their emotions and not invest based on a press release, though. Splashy announcements don't drive stock prices over the long run -- earnings growth does.
Apple's $500 billion in planned spending in the U.S. over the next four years doesn't mark a huge change to its previous spending levels. Meanwhile, the company has struggled to find new hardware products that can share more of the revenue-generating load with the iPhone, which already is the dominant market share player in the United States, and which has minimal top-line growth prospects outside of price increases.
Apple is a low-growth business (revenue was up just 4% year-over-year last quarter) trading at a premium price-to-earnings ratio of 38. That does not look like an appetizing buy, and I expect its returns to be modest from here unless Apple can find a way to re-energize its revenue growth.
For now, I'd say investors should watch Apple stock from the sidelines.
