To hit Icahn's target, Apple's board would have had to increase the volume of a stock buybacks authorized under a program unveiled last year as a way to funnel more cash to shareholders. That plan allows Apple to spend $60 billion on its stock through December 2015. The company only had $37 billion still left for stock purchases under that plan as it began the fiscal year.
That means the board would have had to expand the stock repurchase program to placate Icahn, an irascible billionaire who has a long history of pestering companies to embrace his ideas after buying large stakes in them. Icahn began buying Apple stock about six months ago and says he now owns more than $3 billion worth of the shares. His holdings translate to a stake of less than 1 percent.
Apple declined to comment Monday. The Cupertino, Calif. company previously has said it remains committed to making sensible use of the nearly $159 billion in cash that it held at the end of December.
In the past two weeks, Apple CEO Tim Cook said the company spent $14 billion buying back stock after the shares fell by 8 percent following quarterly earnings report that disappointed Wall Street.
Icahn cited Apple's recent flurry of stock repurchases as one of the reasons for his change of heart.
"We are pleased that Tim and the board have exhibited the 'opportunistic' and 'aggressive' approach to share repurchases that we hoped to instill with our proposal," Icahn wrote in an open letter to Apple's shareholders. He also said he is excited about Cook's pledge to release new products this year that will expand Apple's line-up beyond smartphones, tablets and personal computers.
Apple's stock gained $9.46, or nearly 2 percent, to $529.14 in afternoon trading. The stock remains about 25 percent below its peak reached in September 2012. Investors are fretting about Apple's slowing growth amid tougher competition in the mobile device market.
Icahn is ending his crusade after months of railing against Apple's eight-member board in television interviews and posts on his Twitter account.
The barbs didn't seem to be winning Icahn's many allies.
The California Public Employees' Retirement System, a major Apple shareholder, had already dismissed Icahn's proposal as unnecessary meddling and the influential shareholder advisory firm Institutional Shareholder Services weighed in Sunday with report recommending a vote against Icahn's idea.
New York City Comptroller Scott M. Stringer, who manages pension funds that own 2.5 billion Apple shares, joined in the criticism of Icahn in a Monday letter to the company's stockholders.
"As long-term shareowners, we believe the proposal is a short-sighted and unnecessary attempt to boost Apple's current stock price at the expense of its long-term financial flexibility and value creation potential," Stringer wrote.
Institutional Shareholder Services said Apple could be doing more to generate better returns from its cash, but concluded the board has made enough "good-faith efforts" to be trusted to look out stockholders' best interests.
"The board's latitude should not be constricted by a shareholder resolution that would micromanage the company's capital allocation process," ISS wrote in its recommendation against the proposal. As it is, the advisory firm said Apple is on track to spend about $32 billion buying back its stock during the current fiscal year.
AP Business Writer Tom Murphy in Indianapolis contributed to this story.