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Warren Buffett’s Apple stock bet boosted by $110B buyback plan

Warren Buffett’s Apple stock bet boosted by $110B buyback plan

For all his talk of getting rich slowly, Warren Buffett certainly saw rapid and massive returns since he first invested in Apple (NASDAQ: AAPL) stock in 2016.

In fact, the original investment in AAPL stock between the time it was initially made and 2024 returned a staggering 660% – and that is without accounting for the dividend yields which have been growing steadily, including in 2024.

This year, however, brought a significant change to Apple’s fortunes as its stock market performance started lagging behind and even saw a substantial year-to-date (YTD) decline of about 7% due to the reports of a business slowdown in China and an apparent failure to stay on top of the ongoing artificial intelligence (AI) boom.

Apple stock poised for a massive change in 2024 trend

In line with the uncertainty of the year, Apple offered a substantial surprise with its latest earnings report – published after the stock market closed on Thursday, May 2.

Not only did the technology giant beat earnings per share (EPS) – $1.53 compared to the predicted $1.51 – and revenue – $90.75 billion compared to the predicted $90.45 billion – estimates, but the blue chip offered a string of exciting news to investors and traders.

While the increase in dividend payments from $0.24 to $0.25 per share – an increase which will see Buffett receive $226.4 million on his AAPL investment – few elements of the report turned heads as much as the firm’s stock buyback plan.

In fact, Apple is setting a new record with its new repurchase scheme as it will use as much as $110 billion in the endeavor – no company in history spent more since the practice stopped being considered a tool of market manipulation and were made legal in 1982.

AAPL stock price chart

Investors were quick to react to the onslaught of positive news and Apple stock price today stands at $183.18 after an impressive 5.87% extended session surge – the highest they’ve been since late February.

AAPL stock YTD price chart. Source: Google

The report has, by press time, broken the 2024 negative trend Apple has been on and put the stock well on its way to reversing its 6.79% YTD decline and the stock is very close to resetting itself to the January 2 price of $185.64.

Still, it is worth noting that Apple has had several seemingly major rallies in 2024 that have proven to be short-lived – the penultimate being the surge driven by a Bernstein price target upgrade – though Wedbush’s expert analyst Dan Ives considers the report a harbinger of an ‘AI driven supercycle coming to Cupertino.’

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