AI capex is coming at the expense of a crucial pillar for stock gains, Goldman says

Companies are spending billions investing in AI, but it's coming at a cost: They're buying back shares at slower rates. Goldman Sachs outlined that as AI capex grows, companies buying back shares at a slower rate. The hyperscalers that are leading AI spending, are seeing share buyback growth slow at a more dramatic rate, a drag on the broader market's buyback rates. "The AI investment boom will drive a continued shift from buybacks to capex for the S&P 500," the analysts wrote. Share buybacks are typically bullish for a stock, and provide support for stocks when companies see their shares as undervalued. Buybacks also reduce the amount of shares in the market, boosting prices. Goldman projects S&P 500 capex to grow 33% in 2026 while gross buybacks grow only 3%. For comparison, capex growth sat at 20% and buybacks grew 9% in 2025. "The Q1 earnings season highlighted the ongoing rotation from buybacks to capex and R&D. S&P 500 capex growth is tracking at +39% during Q1 compared with +1% for S&P 500 gross buybacks," the analysts laid out. This dynamic of share buyback growth stalling as capex growth intensifies is more pronounced for the Big Tech names leading the AI spending spree. The AI hyperscalers like Amazon, Google, Meta, Microsoft, and Oracle, are expected to spend $755 billion in capex in 2026, an 83% year-over-year jump, according to Goldman. "Consensus estimates show hyperscaler capex amounting to 100% of cash flows from operations this year, which in turn leaves little room to return cash to shareholders without a sharp deceleration in capex growth, a large drawdown of cash balances, or a major increase in debt," the analysts explained. "The group now allocates 15% of total cash spending on buybacks compared with an average of 27% from 2017-2022." In 2025, Amazon, Google, Meta, Microsoft, and Oracle alone accounted for more than a third (34%) of the capex and R&D of the S&P 500, while only making up 10% of buybacks and dividends. The firm expects this hyperscaler dynamic to continue, saying "Reduced buyback activity among the hyperscalers will weigh on aggregate S&P 500 buybacks." Goldman noted that some of the buyback headwinds from hyperscalers could be offset by an uptick in buyback from the beneficiaries of Big Tech's AI spending, like chipmakers.