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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 (NASDAQ: AAPL) 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.
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.