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With Apple's shares outperforming again in 2023, it's unlikely the iPhone maker is shifting strategies. Image Credit: REUTERS

Apple's slowing growth and cash-rich balance sheet are again fueling speculation that the world's most valuable company should make a big acquisition.

Entertainment giant Walt Disney Co. recently joined a long list of potential acquisition targets that over the years has grown to include Netflix, Tesla, Peloton and Sonos. They all have one thing in common: Anyone betting that Apple would buy them has so far been sorely disappointed.

"You're probably missing the value of the business if you think the key catalyst for investment is a major acquisition," said Kevin Walkush, portfolio manager at Jensen Investment Management. "It's a low-probability bet."

Apple is famous for eschewing splashy acquisitions in contrast with peers like Microsoft and, which have continued to make deals despite increasing scrutiny by regulators. Instead, Apple favors buying small startups to augment its home-grown pushes into new markets even if those efforts take many years to bear fruit.

With Apple's shares outperforming again in 2023, it's unlikely the iPhone maker is shifting strategies. The stock is up 25% in 2023, outperforming its megacap peers for the second-consecutive year. Over the past two decades, Apple has averaged an annual return of 39%, including dividends. The S&P 500, by comparison, sits at 10%.

The stock fell 0.8% on Thursday.

"Not doing a big deal hasn't impacted them and if it ain't broke, don't fix it," said Gregg Abella, chief executive officer of Investment Partners Asset Management, which holds the stock. "I'm pleased that Apple has a lot of discipline in this regard."

Apple's biggest purchase in its history was the $3 billion takeover of Beats Music and Beats Electronics in 2014. Microsoft's pending acquisition of video game maker Activision Blizzard is valued at $69 billion.

Even with Apple's revenue growth projected to shrink 2% in fiscal 2023, the company appears to be doing even less on the acquisition front. It spent $306 million on business acquisitions in fiscal 2022, down from $1.5 billion in fiscal 2020. In the most recently reported quarter, Apple removed the line item in its financials that accounted for such activity.

Instead of splurging on deals, Apple returns much of its excess cash to shareholders via share buybacks and dividends. Those expenditures totaled more than $100 billion in fiscal 2022 and it still had $165 billion in cash, cash equivalents and marketable securities, as of Dec. 31.

For Logan Purk, an Edward Jones analyst, Apple has been so successful by making smaller, incremental acquisitions that a bigger deal would raise a lot of concerns.

"If Apple tried to do some massive deal that was outside of its wheelhouse - not complementary, really changing its story - that would make me worried," Purk said in an interview. "It would be so outside its normal course of action that you would have to ask why."

More than two dozen analysts have raised their 12-month price targets following Meta's second round of layoffs in mid-March. However, the analysts' return potential for the stock sits at 9.7%, comfortably below its 5-year average of about 24%. The stock has surged almost 140% from a seven-year low in November as Meta started cutting thousands of jobs in light of falling sales.