Key Points
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Over the last 15 years, Apple reduced its share count by 43.2% under CEO Tim Cook.
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Apple could make more aggressive investments in expanding its hardware ecosystem under new CEO John Ternus.
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Nvidia is committed to returning half of its free cash flow to shareholders through buybacks and dividends.
Over his 15-year tenure as CEO, Tim Cook grew Apple (NASDAQ: AAPL) from a market capitalization of roughly $350 billion to well over $4 trillion. The strategy was fairly straightforward.
Apple consistently releases updated versions of its core products — iPhone, Mac, and iPad — while expanding into wearables, headphones, and earbuds. It also grows its services division, encompassing App Store revenue, advertising, iCloud, Apple Music, Apple TV, Apple Pay, and more, to complement its hardware ecosystem.
That strategy generated steadily rising profits and free cash flow (FCF), which Apple used to reinvest in its core business, increase its dividend, and repurchase large quantities of its own stock.
For years, Apple held the largest buyback budget of any U.S. company. But that could all change under new CEO John Ternus.
Image source: Getty Images.
Apple Is Dialing Back Buybacks Even as Earnings Growth Accelerates
Cook’s strength lay in operations, but Ternus served as vice president of hardware engineering before ascending to the CEO role. His appointment sends a clear signal to Wall Street that Apple is preparing for a period of innovation rather than leaning on its expanding services network, incremental product upgrades, and stock buybacks to drive earnings growth.
Even under Cook’s leadership, Apple had already been scaling back buybacks as it geared up for major product upgrades and new releases discussed at Apple’s September 9 event.
Data by YCharts.
As the chart illustrates, Apple’s trailing-12-month buybacks peaked at $100 billion but have since declined to $82.2 billion. Meanwhile, Nvidia‘s (NASDAQ: NVDA) buybacks have surged in step with its free cash flow, while other major tech stocks such as Microsoft, Meta Platforms, and Alphabet — once buyback leaders — have pulled back as they invest heavily in artificial intelligence (AI).
Data by YCharts.
For years, Apple’s services revenue outpaced its product revenue. That trend has shifted, however, as Apple reported its strongest third quarter in five years on July 30, which included an 18.1% year-over-year increase in product sales.
Some of that jump may reflect consumers preempting anticipated price increases due to rising memory chip costs. Still, it is encouraging to see Apple’s earnings growth accelerate after years of relatively modest results.
Nvidia’s Capital Return Program Has Room to Grow
Under Ternus, I would expect Apple to continue making sizable, though somewhat reduced, buybacks while also reinvesting more capital into the business to expand its product portfolio. Meanwhile, Nvidia appears well-positioned to keep growing its capital return program.
In its latest quarter, Nvidia spent $19.73 billion on buybacks and $6.05 billion on dividends after raising its dividend by 2,400% earlier this year. By comparison, Apple repurchased $25.95 billion in stock and spent $4 billion on dividends. Apple has increased its dividend every year since 2012, though it typically makes only small mid-single-digit percentage increases.
During its August 26 earnings call for the second quarter of fiscal 2027, Nvidia reported that it had returned 60% of free cash flow to shareholders so far this fiscal year, exceeding its 50% guidance. Even if Nvidia reverts toward 50% and continues growing its dividend, it could still comfortably surpass Apple in total buybacks.
Nvidia began shipping products under its latest Vera Rubin platform in August, which falls in Q3 fiscal 2027. Nvidia expects Rubin to account for a staggering 20% of third-quarter data center revenue. The scale of the Rubin ramp is so significant that Nvidia is guiding for a 70% year-over-year increase in fiscal 2028 revenue. If Nvidia converts a similar proportion of that revenue into free cash flow — meaning FCF also grows by approximately 70% — it will likely surpass Apple in buybacks next year, even if Apple holds its buyback spending steady.
Nvidia’s top priority remains organic growth. However, it is generating so much free cash flow that it can pursue that goal while still leaving ample cash to return to shareholders.
Nvidia Offers Better Value Than Apple
In recent years, Apple has come to resemble a consumer staples stock more than a technology stock, while Nvidia has been a hypergrowth stock. Under Ternus, I could see Apple becoming more growth-oriented. Nvidia, meanwhile, is evolving into a dividend growth stock at an attractive valuation — trading at just 24.3 times earnings compared to Apple’s 35.8.
Data by YCharts.
Apple’s premium valuation has been built around reliability rather than growth rate, similar to how Walmart and Costco Wholesale trade at elevated multiples due to their loyal customer bases and resilience during recessions. If Apple shifts to a more growth-oriented capital allocation strategy, it will need to justify its higher multiple with accelerated earnings growth.
Apple isn’t cheap, but it remains a solid stock to buy and hold for investors who believe it can meet expectations. Nvidia, however, could ultimately prove the better long-term value — especially for investors seeking a company with a capital return program positioned to expand.
Is Now the Right Time to Buy Apple Stock?
Apple’s path forward hinges on whether Ternus can reinvigorate product innovation while maintaining the disciplined capital management that has defined the Cook era. Investors will be watching closely to see if the new CEO can balance reinvestment with shareholder returns — and whether Nvidia’s relentless cash generation will overtake Apple’s buyback dominance in the near future.
