Some of the largest tech companies in the world are spending massive amounts of capital on artificial intelligence (AI) data centers. Just five companies have earmarked about $700 billion for 2026 alone. Many investors are wary of companies spending that much.
Meanwhile, one of the largest tech companies in the world is bucking that trend. While others are budgeting hundreds of billions of dollars for capital expenditures (capex), this company spent just $12 billion last year. 2026 is shaping up to look very similar. And that could have a surprising impact on its earnings per share, pushing its stock to outperform for the year.
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The big tech stock bucking the trend
If there's one company that has proven over and over again that you don't have to be at the bleeding edge of technology to create market-leading products, it's Apple (AAPL 1.93%). The company behind the iPhone, Apple Watch, and AirPods is hoping its playbook pans out once again with artificial intelligence.
While Apple has been seen as a laggard in artificial intelligence development and integration with its devices, the company is now considered a safe haven amid the AI arms race among big tech companies and the potential software industry disruption from all-in-one AI agents and the growth of vibe coding. Apple's consumer products aren't going anywhere, and it doesn't take huge sums of cash to ensure they stay on people's desktops and wrists, and in their pockets.
iPhone sales climbed 23% year over year last quarter, driven by strong growth in China. Sales in the region soared 38%. Management sees demand persisting, and it now finds itself in a supply constraint as it needs more chips from supplier Taiwan Semiconductor Manufacturing. TSMC, however, is constrained by demand from the hyperscalers' massive build-out plans. Management also noted constraints in the memory chip market, which won't have a significant impact on its supply, but it expects a modest impact on gross margin this quarter and beyond. All in all, it's still expecting 13% to 16% revenue growth for the current quarter.
NASDAQ: AAPL
Key Data Points
Demand could get a further boost if Apple successfully delivers on its promised Siri revamp. The new digital assistant is expected to feature more generative AI capabilities and the ability to integrate data from across apps. Management says it's on track to launch this year. However, those advanced capabilities will require newer iPhones, which could spur a massive upgrade cycle of pent-up demand along with a push toward more capable higher-end models.
Meanwhile, Apple's services segment is still growing quickly, up 14%. The high-margin business could also get a boost from more AI capabilities across apps and on devices, driving App Store sales and potentially expanding into new AI-related offerings. Steady growth in the services business should support the company's overall margin profile amid chip shortages.
All this is to say, Apple is producing solid financial results. But there's a significant advantage that its relatively small capital expenditure budget provides over other big tech companies, which could lead to strong performance in 2026.
Apple's big cash advantage
Apple is set to produce even more free cash flow in 2026 than it did in 2025, when it produced $123 billion for the calendar year. Meanwhile, the hyperscalers spending hundreds of billions on data centers are set to see free cash flow fall precipitously this year. Amazon (AMZN 1.52%), for example, is expected to produce negative free cash flow in 2026 after announcing plans to spend $200 billion on capex this year. Likewise, analysts see Meta Platforms' (META 2.52%) free cash flow declining 90% this year, after ramping up its capex budget by 72% at the midpoint of its guidance.
Instead of spending its cash on AI data centers, Apple can return more capital to shareholders. Its primary vehicle for doing so is share repurchases. Since Tim Cook took over as CEO, Apple has repurchased more than $700 billion of its own stock. That has resulted in the total share count shrinking more than 44% since early 2013. The reduced share count leads to growing earnings per share even as Apple produces more modest revenue and net income growth than it once did. By retiring shares, Apple's earnings per share are about 79% higher today than they would've been.
AAPL Shares Outstanding data by YCharts
Amazon, Meta, and the other big tech companies also have share repurchase authorizations. But with huge amounts of cash going toward capital expenditures, they're unlikely to use them. What's more, both companies offer significant share-based compensation, which means they have to buy back even more shares just to offset the dilution from their employee stock incentives. In fact, Amazon's shares outstanding have climbed over the past three years while Meta's have barely budged.
Meta notably spent $26.3 billion on share repurchases last year, but its shares outstanding fell by just 0.1%. Importantly, Meta also ceased repurchasing shares in the fourth quarter as capital expenditures accelerated, which suggests investors shouldn't expect it to continue buying back shares in 2026.
As a result, Apple can deliver strong earnings-per-share growth even if its operating results are more modest. Moreover, it doesn't come with nearly as much uncertainty about its operations and financial future. That could push more investors to pile into the stock this year, leading it to outperform.
