The AI Arms Race Is Devouring Big Tech's Buyback Logic
Miles Bennett
The four biggest AI spenders are budgeting a combined $725 billion in capex this year; only Microsoft still bought back stock in Q1 — at a decade low of $3.4 billion. The buyback era is being crowded out by AI infrastructure, rewriting shareholder-return math.
Where did the buyback money go?
In Q1, Alphabet, Meta, and Amazon all stopped repurchasing shares. Only Microsoft kept buying — just $3.4 billion, its lowest in nearly a decade.
This means → the default Big Tech playbook of "earn cash, buy back stock" has been displaced by AI capex.
Bloomberg Intelligence senior credit analyst Robert Schiffman: capex is running far above anyone's highest estimate from a year ago, and buybacks will likely keep shrinking.
Not just stopping buybacks — issuing new stock?
Alphabet plans to sell roughly $85 billion in equity, its first share offering in 20 years, to fund data-center construction.
Meta is reportedly weighing a share sale worth tens of billions of dollars.
In plain terms = these companies used to pull shares off the market, making each remaining share more valuable. Now they are doing the opposite — selling new shares and diluting every existing holder. A complete reversal.
Why are "asset-light" tech giants turning heavy?
Brent Fredberg, portfolio manager at Brandes Investment Partners ($43 billion AUM), notes these firms ran an asset-light model for the past decade — strong network effects, minimal physical assets, abundant free cash flow.
Now free cash flow is falling, balance sheets are less attractive, and the companies are competing head-to-head on the AI track.
This reflects a shift: AI infrastructure is pulling tech giants off the "money-printing" track and onto a capital-intensive industrial one.
Not every giant is burning cash — who took a different path?
Apple chose not to build massive AI compute in-house, partnering with Google and others instead. In April it authorized $100 billion in buybacks and raised its quarterly dividend 4% to $0.26 per share.
Nvidia, the arms dealer in this race, authorized $80 billion in buybacks last month. It repurchased roughly $20 billion in fiscal Q1, up about $6 billion year-on-year.
This means → companies that stay out of AI infrastructure can maintain the traditional shareholder-return rhythm; the one selling the infrastructure — Nvidia — is the biggest winner of all.
How long will the market stay patient?
For now, investors are on board — Alphabet is up roughly 15% year-to-date, beating the S&P 500's 9.2% gain.
But Schiffman draws a clear risk line: the real trouble comes from a macro shock or the capital markets shutting down.
In plain terms = as long as markets keep lending and share prices keep rising, this bet can continue. The moment financing tightens, the gap between burn rate and payoff timeline becomes a fatal problem.
Content is for reference only, not financial advice.