Even though many investors have pulled back from tech stocks during the recent market downturn, large tech companies are still expected to continue buying back their own shares. These buybacks can help support stock prices by reducing the number of shares available, which increases earnings per share. And, interestingly, companies like Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN) are holding more than $500 billion in cash combined.
That kind of financial strength means that these firms do not need to hold back on investments, and according to Bloomberg Intelligence analyst Robert Schiffman, there is likely to be little or no slowdown in buybacks. Nevertheless, investors will be watching earnings reports for signs of what is next. Alphabet (GOOGL) and Apple, which are known for massive buyback programs, usually announce new buyback plans during their first-quarter results. In fact, last year, Alphabet approved a $70 billion share repurchase and started paying a dividend, while Apple committed $110 billion to buybacks.
Buybacks also help show that a company is financially strong. Keith Lerner from Truist Advisory Services said that buybacks can help investors feel reassured that a company sees value in its own stock. Interestingly, even with major spending on artificial intelligence, big tech firms are still bringing in large amounts of cash. More specifically, analysts estimate that Apple, Microsoft, Nvidia (NVDA), Alphabet, Amazon, and Meta Platforms (META) will generate almost $100 billion in free cash flow in the first quarter of 2025. As a result, with so much cash on hand, there is little reason to let it just sit there.
Which Tech Stock Is the Better Buy?
Turning to Wall Street, out of the stocks mentioned above, analysts think that NVDA stock has the most room to run. In fact, NVDA’s average price target of $168.49 per share implies more than 62% upside potential. On the other hand, analysts expect the least from AAPL stock, as its average price target of $239.45 equates to a gain of 15.6%.
