① Among the four largest AI-spending companies, only Microsoft conducted share buybacks in the first quarter of this year, and the scale was the lowest in nearly a decade;
② Increased AI investment has led tech giants to shift their business models from “asset-light” to capital-intensive, with capital expenditures projected to reach as high as $725 billion this year.
The AI race is becoming so expensive that it is eroding a key driver behind the sustained rise in big tech stocks over the years—consistent share buybacks.
Among the four largest AI-spending companies—$Alphabet-C (GOOG.US)$、$Microsoft (MSFT.US)$、$Meta Platforms (META.US)$and$Amazon (AMZN.US)$—only Microsoft conducted share buybacks in the first quarter of this year. According to data compiled by media outlets, Microsoft’s $3.4 billion in buybacks represented the lowest level among this group in nearly a decade.
Senior credit analyst Robert Schiffman stated, “The current scale of capital expenditures far exceeds what the market could have anticipated even a year ago—or even three months ago. As companies prioritize capital spending, share buybacks are likely to continue declining.”
Some companies have even begun issuing additional securities to raise funds for AI investments. Earlier this month, Google expanded its record-breaking equity financing to nearly $85 billion; Meta is also reportedly considering a stock issuance that could raise tens of billions of dollars.
The decline in share buybacks and the move toward raising new equity reflect a shift in the operating models of tech giants amid massive expansions in AI computing capacity. Historically, these companies attracted investors through an 'asset-light' model, but they are now becoming increasingly capital-intensive.
The four leading AI-spending giants are expected to allocate up to $725 billion in capital expenditures this year, with further increases projected by 2027. These expanding investments are consuming more free cash flow and forcing companies to take on greater debt.
Brent Fredberg, portfolio manager and technology sector analyst at Brandes Investment Partners, noted that without share buybacks, tech giants will face heightened pressure to demonstrate that their AI investments generate commensurate returns.
“The risk profile has changed. Over the past decade, these companies operated under an asset-light model and benefited from significant network effects. Now, however, free cash flow is declining, balance sheet appeal is weakening (though still strong), and they are shifting from buying back shares to issuing new equity, while competition among them intensifies.”
Among the four AI giants,$Alphabet-C (GOOG.US)$has historically been the largest share repurchaser. Over the past five years, Google has repurchased approximately $280 billion worth of shares, equivalent to more than 6% of its current market capitalization. However, the first quarter of this year marked the first time in nearly a decade that it did not conduct any share buybacks, compared with over $15 billion in repurchases during the same period last year.
Of course, not all technology giants have changed their capital return strategies.
$Apple (AAPL.US)$continues to implement share buybacks while avoiding large-scale capital expenditures, opting instead to collaborate with companies like Google to deliver AI capabilities. In April this year, Apple approved a $100 billion share repurchase program, unchanged from last year, and increased its quarterly dividend by 4% to $0.26 per share.
As one of the primary beneficiaries of the AI spending boom,$NVIDIA (NVDA.US)$is also actively repurchasing shares, approving an $80 billion buyback plan last month, following a $60 billion authorization in August last year. In its first fiscal quarter ended January this year, NVIDIA repurchased approximately $20 billion worth of shares, up from about $14 billion in the same period a year earlier.
It should be noted that investors currently still support major technology companies allocating capital toward AI infrastructure rather than directing more funds toward share buybacks.
For example, since$Alphabet-C (GOOG.US)$In the approximately two weeks since the announcement of the share issuance plan, its stock price has risen slightly, while during the same period$S&P 500 Index (.SPX.US)$fell by 2.5%,$NASDAQ 100 Index (.NDX.US)$fell by 3.2%.
Schiffman stated, “These companies have ample access to capital from both public and private markets, so even with significantly higher capital expenditures, they still have sufficient funding. The real risk lies in a deterioration of macroeconomic conditions or a shutdown of capital markets—that would pose the greatest challenge.”
Editor/melody