Apple's $500 Billion Investment Is 'Unrealistic' According To Analysts: Here's Why It 'Lacks Substance'

US President Donald Trump expressed his gratitude to Apple CEO Tim Cook after the company announced plans to invest £395.82 billion ($500 billion) in the United States, creating 20,000 new jobs. The move could strengthen Apple's standing with Trump's 'America First' agenda and potentially help the company avoid tariffs. While one analyst viewed it as a strategic decision, another dismissed it as unrealistic.

Trump was quick to celebrate Apple's announcement, posting on Truth Social that the investment demonstrated the company's 'faith in what we are doing.' The tech giant plans to roll out the investment over the next four years.

Apple's $500 Billion Investment

Apple's £395.82 billion ($500 billion) investment announcement follows CEO Tim Cook's White House visit last week and shortly after the administration imposed new 10% tariffs on Chinese imports.

This massive investment from Apple will expand its teams and facilities nationwide and fund a new Texas factory focused on advancing its artificial intelligence efforts. 'We are bullish on the future of American innovation, and we're proud to build on our long-standing U.S. investments with this $500 billion commitment to our country's future,' Cook said in a press release.

Analysts Weigh In On Apple's Ambitious Plan

However, in a note to investors, UBS analyst David Vogt expressed scepticism, stating, 'Call us a sceptic...we believe it lacks substance,' regarding the announcement and its large headline figure, citing several reasons.

He explained to Fortune that only 10% of Apple's supply chain is based in the US, with the remainder spread across Asia—and that 10% likely took the company nearly a decade to achieve.

His note also highlights other inconsistencies within the investment plan. He estimated that adding 20,000 employees would only increase operating expenses by about £3.96 billion ($5 billion) annually.

Furthermore, according to the UBS note, Apple spends only around £7.92 billion ($10 billion) annually on data centre capital expenditures. While it generates roughly £79.16 billion ($100 billion) in free cash flow each year, he noted that £71.25 billion ($90 billion) goes toward share buybacks.

Considering that Apple's current £7.92 billion ($10 billion) in capital expenditure is a small fraction of the £98.95 billion ($125 billion) per year that the new US investment would demand, Vogt questions the source of the extra funds, adding that he doubts Apple will reduce its share buybacks.

Therefore, £395.82 billion ($500 billion) over four years is 'completely unrealistic mechanically,' Vogt told Fortune, adding, 'it's unclear where the cash flow comes [from] to try to even remotely attempt this.' Vogt declined to speculate on Cook's motives.

The Complexities Of Apple's US Expansion

Industry analysts also remain cautious in evaluating these attention-grabbing investment figures. Gil Luria of D.A. Davidson told Reuters, 'It is unclear whether this announcement represents an acceleration in spend.'

The all-encompassing nature of Apple's investment figure—which, as Reuters reports, 'includes everything from purchases from U.S. suppliers to U.S. filming of television shows and movies for its Apple TV+ service' makes it hard to gauge its actual impact.

It's worth noting that Apple has made similar announcements in the past. In 2018, during Trump's first term, the company pledged a £277.06 billion ($350 billion) contribution to the US economy, and then, in 2021, during the Biden administration, announced an increase to £340.39 billion ($430 billion).

After returning to office, Trump has emphasised his 'America First' policy, backing it up with tariffs on Chinese imports. Apple's announcement aligns with his agenda, aiming to avoid those tariffs.

This announcement came just days after Cook met with the president, and Trump asserted that Apple would build in the US to avoid tariffs. Notably, the tech billionaire was prominent at Trump's inauguration and reportedly donated £0.79 million ($1 million) to the event.

CEO First, Politician Second

Wedbush analyst Dan Ives noted that Apple's US investment plan diversifies its manufacturing strategy and aligns with 'Trump's U.S. investment theme.'

He wrote in a note: 'Cook continues to prove that he is 10% politician and 90% CEO and times like this he will be using his strong ties globally to make sure [it's] smoother waters for [Apple HQ in] Cupertino ahead despite the market agita around AAPL's growth initiatives with Trump heading down the tariff threat path.'

While he is not explicitly sceptical of Apple's announcement, he doesn't see it as 'A signal that Apple is tweaking its China manufacturing buildout.'