Apple Could Save $11 Billion A Year By Avoiding Tariffs After Its $500 Billion U.S. Investment, Says Deepwater's Gene Munster - Apple (NASDAQ:AAPL)

Deepwater Management‘s Gene Munster has shared his insights on Apple’s recent announcement of $500 billion U.S. investments.

What Happened: On Tuesday, Munster took to X to present his analysis of Apple Inc. AAPL’s decision to ramp up its annual U.S. expenditures. He believes the tech giant is set to increase its annual U.S. investments by $39 billion, a 45% increase from the 2021 run rate. However, Munster suggests the actual incremental investment is closer to $20 billion annually.

Three takeaways from $AAPL's announcement of investments in the US:

1- The quick math suggests Apple is increasing its annual US expenditures by $39B, up 45% from the run rate outlined in 2021. In reality, the incremental investment is closer to $20B annually. Prior to today's…
— Gene Munster (@munster_gene) February 24, 2025

He also indicated that Apple’s announcement underscores its realization that an AI-powered future necessitates significant infrastructure investments. He estimates that 15% of the $19 billion incremental spend will be allocated to the hiring of 20,000 new employees, adding roughly $3 billion in annual employee expenses. The remaining 85% is likely to be invested in infrastructure, including expanding data center capacity and chip production for Apple Watches and iPads.

Munster’s third point underscores Apple’s strategic approach to bypass tariffs by redirecting those savings into U.S. investments. He estimates that the U.S. accounts for about 35% of Apple’s total sales, translating to approximately $147 billion in revenue this year. Of that, around $120 billion comes from product sales, which could be affected by the 10% tariffs. Hence, by boosting its domestic investments, Apple could potentially save at least $11 billion per year by avoiding the tariff. Put simply, tariff avoidance covers half of the additional $19 billion in U.S. investment announced.

Why It Matters: Apple CEO Tim Cook‘s announcement of this massive investment in the U.S. is being widely perceived as a means to avoid the tariff threat. Tariffs have been a cause of major cause of concern for Apple. Bank of America analyst Analyst Wamsi Mohan had previously stated that iPhone manufacturers will need to increase prices on iPhones, iPads, and other products by about 9% to offset the impact of tariffs.

Meanwhile, President Donald Trump stated that the investment was a result of Apple’s confidence in his administration and policies.

Apart from Gene Munster, several other analysts have presented their reactions to the iPhone maker’s $500 billion investment. UBS analyst David Vogt stated that “it lacks substance”, while renowned short-seller James Chanos called it “unrealistic” considering Apple’s current capital base is less than $160 billion. On the other hand, Wedbush’s Dan Ives said, “Apple made the smart strategic move with this $500 billion bet on its US buildout.”

Apple stock closed 0.66% higher at $247.17 on Monday.