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AI capex pressures stock buybacks, pushing more shares back into the market
Fidelity estimates buybacks have fallen to about 31% of earnings as borrowing rises and companies invest heavily in AI infrastructure, narrowing the cushion for investors.
Yahoo Finance argues that the AI spending boom is forcing investors and companies to rethink the role of stock buybacks, which had previously helped boost per-share metrics by shrinking share counts.
The outlet notes that the S&P 500 total share count is rising again even as companies continue repurchases. It attributes the shift to the fact that buyback programs can coincide with new share issuance, including stock-based compensation, acquisitions, IPOs, and secondary sales, particularly in Big Tech where stock-based pay is a major factor.
Yahoo Finance adds that more cash is being redirected to capex for data centers, chips, servers, networking equipment, and power. It cites Fidelity’s estimate that buybacks have declined to roughly 31% of earnings as borrowing rises, and says the largest technology firms can still spend on both repurchases and AI build-outs, but the margin is narrowing.
As examples, Yahoo Finance points to Alphabet’s planned $80 billion stock sale amid ramped AI investment after years as a major buyer of its own shares, and says Amazon’s free cash flow fell 95% over the past year even as operating cash flow rose, largely because nearly all additional cash was spent on AI infrastructure.
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