Why Apple, Microsoft and Other Big Buyback Stocks Are Crushing the S&P 500’s Returns

An Apple logo at a store in Shanghai on May 10, 2019. Hector Retamal/AFP via Getty Images

Some long-term valuation models are projecting negative overall returns for the S&P 500 over the next decade. Analysts are expecting rising interest rates to weigh on earnings growth, so companies may start turning to more aggressive share buybacks to boost EPS.

Deep Pockets

In the third quarter of 2021, Apple Inc. led all S&P 500 companies with $20.4 billion in buybacks. Alphabet Inc. was a distant second with $15 billion in buybacks, followed by Meta Platforms Inc. with $12.6 billion.

Over the last decade, no company has come close to Apple in the buyback department. Apple has bought back $487.6 billion in stock since 2012. Microsoft Corporation is a very distant second with $147.1 billion in buybacks, followed by JPMorgan Chase & Co. with $146.2 billion.

Why Buybacks Matter

It should come as no surprise to investors that all three of the stocks that have been most aggressive in buying back shares over the last 10 years have outperformed the SPDR S&P 500 ETF total return by a wide margin in that period.