Big Tech cuts buybacks 17% for AI spending; growth stocks now outpace

Barclays released analysis showing that major U.S. technology companies are sharply reducing share buybacks to fund AI infrastructure investment, marking a decisive shift in capital allocation priorities. The brokerage reported that buybacks by the largest technology firms have fallen about 17% over the past year, even as repurchases across the rest of the technology sector and the broader S&P 500 have continued to rise.

The six largest technology companies—Apple, Microsoft, Nvidia, Alphabet, Amazon, and Meta—accounted for more than a quarter of all S&P 500 buybacks in 2024 and 2025, giving them outsized influence on aggregate buyback trends. The decline reflects growing funding needs for AI investments, with companies increasingly relying on debt issuance, equity offerings, convertible securities, and operating cash flow to finance expansion rather than deploying buybacks to return capital. Barclays also noted that reduced stock-based compensation following aggressive workforce reductions may have lessened the need for buybacks in the first place.

The scale of the AI spending commitment is substantial: hyperscaler capital expenditures are expected to exceed $1 trillion（約160兆円） annually by 2028. This multiyear buildout has already begun to reshape investor sentiment. Big Tech valuations have compressed from around 33 times earnings two years ago to below 25 times as the market factors in the prolonged investment cycle. Despite this valuation pressure, Barclays argued that the market's focus has shifted decisively toward growth. Since ChatGPT's launch in late 2022, the S&P 500 Buyback Index has underperformed the broader S&P 500 by roughly 30%, indicating that investors are placing greater value on companies reinvesting capital into AI-driven expansion rather than returning cash to shareholders. Barclays concluded that this shift in investor preference means the sharp slowdown in buybacks by major technology companies is unlikely to weigh significantly on the broader equity market.

The shift in capital allocation by Big Tech reflects a fundamental reorientation of how the market values companies in the AI era. Barclays' analysis shows that the six largest technology firms—which together represent a substantial portion of S&P 500 buyback activity—are now prioritizing internal reinvestment over shareholder returns. This is not a marginal trend; the 17% year-over-year decline in buybacks by the largest tech companies stands in contrast to rising repurchases elsewhere in the technology sector and the broader market, indicating the strategic weight these firms place on AI infrastructure.

The magnitude of the commitment is striking: hyperscaler capital expenditures are expected to exceed $1 trillion（約160兆円） annually by 2028. To finance this expansion, companies are employing multiple mechanisms—debt issuance, equity offerings, convertible securities, and operating cash flow—rather than depleting cash reserves through repurchases. This financing strategy has compressed Big Tech valuations from around 33 times earnings two years ago to below 25 times, as the market digests both the scale and duration of the investment cycle ahead.

What makes this shift significant for equity investors is not that buybacks are disappearing, but that the market has explicitly rewarded the companies making this trade-off. The S&P 500 Buyback Index has underperformed the broader S&P 500 by roughly 30% since ChatGPT's launch in late 2022—a stark performance gap that suggests investors view AI-focused capital allocation as more valuable than traditional shareholder returns. Barclays argues this recalibration means the pullback in buybacks poses limited systemic risk to the broader equity market.

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