Big Tech AI spending curbs share buyback growth, Goldman says

Goldman Sachs projects that S&P 500 share buybacks will increase by a mere 3% this year, as heavy artificial intelligence spending by Big Tech and a shaky economic backdrop force companies to reconsider capital allocation priorities.

The subdued buyback growth reflects a broader shift in corporate spending. Traditionally, share repurchases have been a key driver of equity demand and earnings per share growth. However, the massive capital outlays required for AI infrastructure — data centers, specialized chips, and research — are diverting cash that might otherwise be returned to shareholders. This dynamic is particularly pronounced among mega-cap tech firms, which account for a large share of S&P 500 buybacks. The result is a potential headwind for stock prices, as reduced buyback activity may lower support for valuations. For traders tracking real-time moves, NowPrice offers up-to-date quotes on major indices and individual stocks to monitor the impact.

Looking ahead, investors will watch for signs of whether AI spending begins to generate sufficient returns to eventually boost free cash flow and restore buyback capacity. Key data points include Big Tech quarterly capital expenditure guidance, earnings reports, and any shifts in management commentary on shareholder returns. The broader economic environment — interest rate expectations and GDP growth — will also influence corporate willingness to repurchase shares. A sustained slowdown in buybacks could alter the traditional support mechanism for equities, making earnings quality and revenue growth even more critical for stock performance.