Apple's $500 Billion Investment 'Completely Unrealistic Mechanically', Says UBS Analyst

Apple Inc. AAPL’s $500 billion investment plan in the U.S. has been met with skepticism by UBS analyst David Vogt, who has cited several reasons for his doubt.

What Happened: Vogt expressed his concerns in a note to investors. He highlighted that only a mere 10% of Apple’s supply chain is U.S.-based, with the majority spread across Asian countries such as Taiwan and China. He also pointed out that it took Apple nearly a decade to achieve this 10%, reported Fortune on Monday.

"While the headline figure on the surface is a large number, we believe it lacks substance at this juncture based on history," wrote Vogt.

Vogt further questioned the financial feasibility of the plan, estimating that hiring 20,000 employees would result in an added $5 billion in operating expenses each year. He also noted that Apple’s current annual data center expenditure is around $10 billion, generating approximately $100 billion in free cash flow, with $90 billion allocated for share buybacks.

Considering these figures, Vogt expressed skepticism about the source of the additional funding for the $125 billion annual investment required by Apple’s new plan. He stated that reducing share buybacks seems unlikely and termed the $500 billion investment over four years “completely unrealistic mechanically.”

"it's unclear where the cash flow comes [from] to try to even remotely attempt this," Vogt told the publication.

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Why It Matters: Notably, Apple has previously announced similar investments, including a $350 billion contribution to the U.S. economy in 2018 followed by a higher investment of $430 billion in 2021. Dan Ives, an analyst at Wedbush Securities, described the announcement as a “strategic move” to expand the company’s manufacturing footprint while also aligning with President Donald Trump‘s emphasis on U.S. investments.

Besides David Vogt, short-seller James Chanos also called Apple’s $500 billion investment "unrealistic" considering the iPhone maker’s current capital base which is below $160 billion.

Meanwhile, Deepwater Management’s Gene Munster believes Apple 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. He also stated that avoidance of tariffs could help the iPhone maker to save nearly $11 billion annually.

• READ MORE: Mr Beast Calls His Amazon Deal for ‘Beast Games’ a Financial Mistake: ‘This Is the Price You Have to Pay’

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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