Apple Inc.'s  (AAPL)  massive cash hoard keeps growing by the quarter. 

In its second-quarter earnings, Apple reported that it now has $261.5 billion in cash, with 94% of that (or roughly $245 billion) being held overseas. That's a 4% increase from the $256.8 billion in cash it held during the first quarter. 

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Apple may be awaiting the possibility of a future tax holiday as an impetus to put its cash to work. President Donald Trump has indicated he supports some form of tax repatriation in the near term, which would allow companies to repatriate their cash back to U.S. soil at a tax rate of 10% instead of the usual 35%. In the event of a one-time tax holiday, analysts say Apple would be likely to issue stock buybacks or increase its dividend to reward shareholders. 

Others envision more exciting possibilities, however. The tech giant could consider some M&A as a means of building value in its overall business while boosting its stock. 

The rumor mill seems to churn out new acquisition targets by the day, but several names have stuck around, including Disney (DIS) , Netflix Inc. (NFLX) and Tesla Motors (TSLA) , among others. The disbelievers argue that such deals would require massive offers and would also break from Apple's usual acquisition strategy. To date, Apple's largest deal is its $3 billion purchase of Beats Electronics in 2014, while these other companies sport market caps many many times as large.

A Disney deal would allow Apple to live out its rumored ambitions of building an internet-based video service, said Chris Tsai, president and chief investment officer of investment management firm Tsai Capital. Disney might be interested because Apple could serve as a distribution pipeline to the iPhone, which is becoming one of the most popular screens on which to consume content. Disney's management team also has deep expertise within many areas of media, which would help Apple as it dives more into original content creation

Apple has only made 88 deals total over the span of the company's 41-year history, according to Crunchbase. The tech giant tends to make bolt-on acquisitions in emerging tech areas that it hopes to venture into. The company's latest deal for German eye-tracking firm SensoMotoric Instruments is expected to help speed up its work in augmented reality, for example. 

"I think it would be more of a tuck-in mentality vs. a splashy acquisition," said FBN Securities analyst Shebly Seyrafi. "Simply look at virtual reality and self-driving cars, and see which companies have interesting tech that Apple could leverage." 

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In the realm of augmented reality or VR, Seyrafi said Apple could consider looking at a company like super- secretive mixed reality startup Magic Leap. Magic Leap has attracted a lot of buzz (and venture capital funding) over the last few years due to its development of a VR headset. Apple clearly has wide-ranging ambitions in the future of AR and VR, as evidenced by the release of its ARKit developer platform earlier this year and new AR features that will likely come in the next iPhone. Many are expecting that Apple will release some kind of AR goggles or headset, which could make Magic Leap all that more attractive to the company.

Christian Renaud, research director for the Internet of Things at 451 Research, likens Apple's deal strategy to "M&A spackling," where the company may reach a particular juncture in its product development process and then realizes it makes more sense to buy rather than build a particular technology. "They have a tendency to pick up really cool boutique tech companies," Renaud said.

If Apple decides not to wait until Trump's tax holiday rolls around, they may be encouraged to acquire a startup located overseas so it wouldn't have to repatriate the money and have it taxed. There are plenty of European startups focusing on AR and VR technology, Renaud added. 

"That would probably be the primary area -- easy content creation for AR and VR," Renaud explained. "I don't see them doing any device acquisitions. It wouldn't make sense to add another device category because they're trying to do some device consolidation." 

Loup Ventures analyst Gene Munster echoed that sentiment, saying that Apple is likely to buy a small AR/VR company that "no one has ever heard of." Possible targets could be companies such as Scope AR, which has built an AR platform for the enterprise market and counts Boeing (BA) and Caterpillar (CAT)  among its customers, or Leap Motion, a hand-tracking company which creates sensors used in VR headsets, Munster noted. 

Apple is unlikely to do any acquisitions related to the HomePod smart speaker, Renaud said, as Apple is more likely to wait and let it grow on its own for the time being. 

Future Apple employee?
Future Apple employee?

Autonomous vehicles or systems could be a big area of interest, however. Tesla has been a dream of some investors for many months, but others maintain that it's not going to happen. For one thing, buying Tesla would pose a pretty big risk for Apple as the car company's losses continue to balloon and its newest Model 3 vehicle remains untested. 

"Tesla would be very interesting, but I don't see Apple doing it," Seyrafi said. "It has a lot of losses right now and it doesn't seem to fit the bill." 

Apple CEO Tim Cook teased on the company's earnings call on Tuesday that it continues to work on a big project related to autonomous systems, but it remains unclear whether that's related to the rumored Project Titan autonomous vehicle efforts, or something else. Apple doing a tuck-in acquisition makes the most sense in autonomous driving, as many of the related technologies are expensive and complicated to develop. Lidar systems, which are used to help self-driving cars map their surroundings, are particularly expensive. 

In that vein, the company might consider buying self-driving tech startup Quanergy, which creates LiDAR sensors, as a means of getting access to the technology, Renaud said. 

At the end of the day, no one really knows what Apple is thinking, beyond the fact that they've certainly got a lot of cash to spend if they choose to do so.

"It's a lot of money," Tsai noted. "They could pretty much buy Disney and Netflix."

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