Apple is dealing with a rising challenge to its supremacy as the world’s largest public company by market value, from Google parent Alphabet.
But Apple remains the undisputed king of corporate cash. The iPhone maker had an unrivaled $216 billion socked away at the end of 2015.
In fact, the tech sector as a whole increasingly dominates the ranks of corporate savers. The end of 2015 marked the first time the top five nonfinancial, cash-rich companies—Apple, Microsoft, Alphabet, Cisco and Oracle—were are all tech firms, according to Moody’s analysts. They hold a combined $504 billion in cash, or roughly 30% of all cash on US corporate balance sheets, excluding financial firms.
Much of the cash buildup reflects the tendency of companies to keep their stockpiles overseas, rather than repatriate earnings to the US and pay taxes on it. And that’s a reason why, in addition to cash, we see debt levels rising as well. Standard & Poor’s analysts note:
We believe that these companies never intended to have such a large cash pile sitting overseas. If given the choice, most, if not all, would likely prefer to repatriate most of the cash and limit debt issuances. However, investors are demanding greater returns through share buybacks and dividends. Given the limited domestic cash flow generation and the reluctance to repatriate cash at current tax rates, companies are instead issuing debt domestically.
Apple is playing a role here as well. Its own debt levels rose 38% to $63 billion in 2015, in part to pay for the share repurchase programs that have helped made the stock so attractive to some high-profile value investors.