It said Q1 earnings showed capex up 39% against 1% gross buyback growth, with Amazon, Google, Meta, Microsoft and Oracle driving much of the shift.
Goldman expects those hyperscalers to spend $755 billion on capex in 2026, up 83%, with estimates showing capex consuming all operating cash flow and limiting shareholder returns.
The bank said reduced buybacks by AI-heavy tech groups could weigh on aggregate S&P 500 buybacks, though some weakness may be offset by higher repurchases from chipmakers benefiting from AI spending.
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As of May 2026, companies are making a major shift in how they use their cash. Instead of focusing on returning money to shareholders through buybacks and dividends, they are now prioritizing capital expenditures and investments in growth and innovation. This change is clear as share buybacks have dropped, while spending on capex and research and development remains strong. Firms are choosing to reinvest profits back into their operations and future capabilities, marking a significant reallocation of funds away from traditional shareholder returns and towards building long-term value.