Goldman Says Investors Favor 38% Capex Growth Over $1 Trillion in Buybacks
Updated
Updated · MarketWatch · May 11
Goldman Says Investors Favor 38% Capex Growth Over $1 Trillion in Buybacks
11 articles · Updated · MarketWatch · May 11
Goldman Sachs says investors are rewarding companies that reinvest for growth rather than repurchase shares, with first-quarter capex up 38% versus just 1% growth in buybacks.
For 2026, Goldman expects that split to widen to $2 trillion of investment—up by a third from 2025—while share repurchases rise only 3% to $1 trillion.
$775 billion of that investment is expected from AI hyperscalers, which cut buybacks 64% in the first quarter and reduced buybacks-plus-dividends to 20% of spending from a 34% 2017-2022 average.
S&P 500 first-quarter earnings are running at 17% growth—about 4 points above expectations—and forward 12-month estimates have climbed 13%, supporting the index's latest record high.
Since hostilities erupted in the Persian Gulf, Goldman says markets have also rotated back toward quality, favoring stronger balance sheets even as growth investors still command the best outlook.
As AI investment soars past $2 trillion, will it fuel real economic growth or just inflate the next tech bubble?
With AI’s energy thirst set to rival entire nations, can our power grids actually sustain this technological revolution?
AI Capex Boom 2026: How Surging Investment Is Reshaping Corporate Strategy, Buybacks, and Market Risk
Overview
In 2026, corporate capital allocation is undergoing a major transformation as companies shift focus from traditional share buybacks to increased capital expenditures in Artificial Intelligence (AI) infrastructure. This change is driven by escalating demand for AI, with hyperscalers leading the way by redirecting cash toward AI development and reducing buyback activity, which impacts overall S&P 500 buybacks. The market now rewards firms that prioritize innovation and organic growth alongside shareholder returns, making capital returns alone insufficient. As a result, companies without a strong AI strategy, like Salesforce and Accenture, have seen significant stock price declines, highlighting the new investor preference for real investment in AI.