Apple Inc. has a high-quality balance sheet with net cash of $97.6 billion or $103.6 per share at the end of fiscal first quarter. Investors look puzzled regarding what Apple intends to do with its cash hoard.

In the fiscal first quarter, the Cupertino, California-based tech giant generated free cash flow of $16.2 billion, up from $8.6 billion last year. Apple generated operating cash flow of $17.6 billion for the first quarter, up from last quarter's $10.4 billion.

Apple's management has indicated that $64 billion of its cash sits offshore and said it is actively discussing uses of cash, although it has not leaked any at the recent quarter.

While giving no details on the call, Apple's Chief Financial Officer Peter Oppenheimer indicated the Board is looking at all avenues including the supply chain, acquisitions and other areas which we would expect to include buybacks and dividends, says Ben Reitzes, an analyst at Barclays Capital.

Reitzes says Apple does not buyback stock or have a dividend, and its historical major uses of cash include funding its growing capex, pre-buys or strategic buys of components/capacity, small acquisitions, and funding R&D and other investments.

Reitzes still believes that given Apple's rapid growth, a buyback lever isn't necessary, but he does believe the company should examine a meaningful dividend closely and are intrigued by the possibilities around any sizeable acquisitions that could improve its wireless and online services.

Wedbush Securities analyst Scott Sutherland also expects that Apple may announce a dividend sooner. In addition, Jefferies analyst Peter Misek believes a dividend becomes even more likely, with $97 billion of cash and his cash estimate of $142 billion by year-end.

Also, Misek believes Apple's board realizes that it needs to increase its potential investor base in order to achieve a more than $500 billion market cap. He believes having a dividend could increase Apple's available capital pool by 3 to 4 times.

On the other hand, Robert W. Baird analyst William Power has attributed Apple's substantially growth of free cash flow over the past five years to margin improvement and sustained low capital expenditure levels.

Reitzes says his price target of $630 applies a market multiple or 13 times of his 2013 estimate of $48.46, which he believes is very conservative. Given Apple's unprecedented growth, he believes that this type of valuation is very conservative, but somewhat realistic given the difficulty to move the needle with a company this large, in terms of attracting incremental investor funds to move it materially higher.

However, if Apple were to deploy some of its cash in the form of a dividend, we could argue a much higher multiple. Given its attractive valuation and unprecedented growth, Apple remains our top pick in the IT Hardware sector, says Reitzes.

Meanwhile, Misek believes Apple will leverage its balance sheet to pre-buy capacity (often by funding suppliers' capex), continue to aggressively build its data center capacity, lay the groundwork for OLED products in 2013 or 2014, and obtain access to significant amounts of video content.

Apple stock closed Wednesday's regular trading session up 6.24 percent at $446.66 on the NASDAQ Stock Market. The stock touched a new life-time high of $454.45 Wednesday.