Big Tech AI Spending Cuts Stock Buybacks to Lowest Level Since 2019 as $700B Race Intensifies

Big Tech's Soaring Spending on AI Is Eating Into Stock Buybacks

After years of funneling cash to investors through stock buybacks, big technology companies are reining in that spending as they race to sink more money into artificial intelligence. Last quarter, Alphabet Inc., Microsoft Corp., Amazon.com Inc. and Meta Platforms Inc. spent the least on combined share repurchases than in any quarter since 2019, according to data compiled by Bloomberg. Alphabet and Microsoft spent roughly $11 billion on buybacks, while Amazon and Meta held off entirely. Amazon hasn't bought back stock since 2022. "There's certainly a setup for an extended period of reduced share buybacks," said Robert Schiffman, senior credit analyst at Bloomberg Intelligence. "I don't think it's because of a lack of financial flexibility, it's just what are the best uses of capital." The shift from returning cash to shareholders to spending it on AI comes as investors grow increasingly skeptical about whether and when Big Tech's relentless outlays will deliver the promised payoffs. Microsoft shares have plunged 17% and Amazon.com has lost 8% in the wake of earnings reports that revealed higher-than-anticipated spending and not enough anticipated revenue growth to justify it. Meta initially jumped on a strong sales forecast, but the stock has given up those gains and is now down 3.6% since the company's earnings report. Even Alphabet, which is considered the clearest AI winner in the group, has fallen 9.1% since its results hit on Feb. 4. For years, investors have been drawn to Big Tech's ability to generate continual profit growth from strong revenues and limited spending. But the rush to expand computing infrastructure at all costs is upending that equation, with Alphabet, Microsoft, Amazon and Meta expected to spend more than $700 billion combined on capital expenditures this year. "In the history of the world, probably nobody has been able to make more money in asset-light businesses than these companies," said Kim Forrest, chief investment officer at Bokeh Capital Partners. "They're throwing that to the wind because they're all caught up in some kind of race." Get the Markets Daily newsletter. Get the Markets Daily newsletter. Get the Markets Daily newsletter. What's happening in stocks, bonds, currencies and commodities right now. What's happening in stocks, bonds, currencies and commodities right now. What's happening in stocks, bonds, currencies and commodities right now. Bloomberg may send me offers and promotions. Plus Signed UpPlus Sign UpPlus Sign Up By submitting my information, I agree to the Privacy Policy and Terms of Service. The pile of money being thrown at AI-related infrastructure has investors looking more closely at the companies' free cash flow, a metric that demonstrates how profits are being converted into capital. For years, Big Tech firms like Alphabet, Microsoft, Meta and Amazon have been steady generators of free cash flow, but as they commit to pouring money into capex, the numbers are expected to decline. The combined free cash flow for Alphabet, Microsoft, Meta and Amazon is projected to fall 64% over the next four quarters to about $96 billion from roughly $270 billion in 2025, according to data compiled by Bloomberg. "While free cash flow generation remains positive on aggregate, ongoing spending to build GenAI's 'railroad tracks' is becoming a key issue," Evercore ISI chief equity and quantitative strategist Julian Emanuel wrote in a note to clients on Feb. 15. That's a steep decline, but only Amazon is expected to see its free cash flow turn negative over that stretch, with three of the next four quarters in the red. Amazon has long shunned buybacks in favor of investing aggressively in expansions into new markets. Of course, the four companies are sitting on massive piles of money. Each had more than $80 billion in cash and cash equivalents at the end of 2025, with Alphabet and Amazon holding more than $120 billion apiece, according to data compiled by Bloomberg. "The reality is if someone is going to dip into cash or if they want to borrow a little more to do so, the money is out there," Schiffman said. "If I was a CFO, I'd be thinking my sole focus is on generating growth and I want to direct my capital toward long-term cash flow generating assets versus keeping up some sort of consistency on buybacks." Tech Chart of the Day Amazon.com Inc. shares have been trading at a steep discount to Walmart Inc. over the past year with the gap widening. The e-commerce and cloud-computing giant trades at about 22 times forward earnings, compared with 42 times for Walmart. On Thursday, Amazon officially dethroned Walmart as the biggest global company by revenue, a milestone attesting to the massive scale the firm has achieved since its humble beginnings in 1994 as an online bookseller in Jeff Bezos' Seattle-area garage. Top Tech Stories * Robots once again stole the show during China's annual Spring Festival gala, popping up in comedy skits, dancing to Mandarin pop and bouncing off walls like martial arts masters. Investors responded Friday by pushing up shares in robotics firms even as the broader market sagged. * Indian data center-related shares rallied this week, as the country's Prime Minister Narendra Modi reiterated its ambition to emerge as a global hub for AI in the presence of OpenAI's Sam Altman and Anthropic PBC's Dario Amodei. * Chinese tech giant ByteDance Ltd. is hiring in the US for nearly 100 open roles within its artificial intelligence division, an effort to compete with the world's leading US-based AI companies despite years of national security concerns from American lawmakers and regulators. Earnings Due Friday * No major earnings expectedNew US Stocks Insights & Wraps "Equity Insights" are short stories on equity market color, combining key insights from traders, strategists, reporters and more. They can be found by running NI EQINSIGHT, and can be subscribed to here. "Before the Bell" is a daily story with all you need to know before the open on Wall Street. On the Terminal, click here to see it and subscribe. The "S&P Week in Review" is a wrap of equity events, published every Friday. On the Terminal, click here to see it and subscribe. The "S&P Month in Review" comes on the last day of the month. Click here to see and subscribe.

AI sore big tech cos' artificial splurge eats into stock buybacks

In a bold pivot towards the future, major tech giants are pulling back on stock buybacks to invest heavily in artificial intelligence. Their focus on developing advanced AI capabilities, rather than returning cash to shareholders, indicates a strategic shift that could reshape the industry landscape. After years of funneling cash to investors through stock buybacks, big technology companies are reining in that spending as they race to sink more money into artificial intelligence. Last quarter, Alphabet, Microsoft, Amazon.com and Meta Platforms spent the least on combined share repurchases than in any quarter since 2019, Bloomberg data shows. Alphabet and Microsoft spent roughly $11 billion on buybacks, while Amazon and Meta held off entirely. Amazon hasn't bought back stock since 2022. "There's certainly a setup for an extended period of reduced share buybacks," said Robert Schiffman, senior credit analyst at Bloomberg Intelligence. "I don't think it's because of a lack of financial flexibility, it's just what are the best uses of capital." The shift from returning cash to shareholders to spending it on AI comes as investors grow increasingly skeptical about whether and when Big Tech's relentless outlays will deliver the promised payoffs. Microsoft shares have plunged 17% and Amazon.com has lost 8% in the wake of earnings reports that revealed higher-than-anticipated spending and not enough anticipated revenue growth to justify it. Meta initially jumped on a strong sales forecast, but the stock has given up those gains and is now down 3.6% since the company's earnings report. Even Alphabet, which is considered the clearest AI winner in the group, has fallen 9.1% since its results hit on Feb. 4. For years, investors have been drawn to Big Tech's ability to generate continual profit growth from strong revenues and limited spending. But the rush to expand computing infrastructure at all costs is upending that equation, with Alphabet, Microsoft, Amazon and Meta expected to spend more than $700 billion combined on capital expenditures this year. "In the history of the world, probably nobody has been able to make more money in asset-light businesses than these companies," said Kim Forrest, chief investment officer at Bokeh Capital Partners. "They're throwing that to the wind because they're all caught up in some kind of race." The pile of money being thrown at AI-related infrastructure has investors looking more closely at the companies' free cash flow, a metric that demonstrates how profits are being converted into capital. For years, Big Tech firms like Alphabet, Microsoft, Meta and Amazon have been steady generators of free cash flow, but as they commit to pouring money into capex, the numbers are expected to decline. The combined free cash flow for Alphabet, Microsoft, Meta and Amazon is projected to fall 64% over the next four quarters to about $96 billion from roughly $270 billion in 2025. (You can now subscribe to our ETMarkets WhatsApp channel)