Hyperscalers’ share buybacks, which have helped boost bottom lines and fuel stock prices, may now be put on hold as they spend aggressively on AI infrastructure.
Combined buybacks from Alphabet (GOOGL), Amazon (AMZN), Meta (META), Microsoft (MSFT) and Oracle (ORCL) – aka the country’s leading AI hyperscalers – fell to just $4.4 billion in the third quarter, according to figures analyzed by Kobeissi’s letter. This is the lowest amount spent since the third quarter of 2017. The third quarter also represents the third consecutive quarter where redemptions have been less than $5 billion.
Share buybacks in this group have fallen 90% since peaking at $45.9 billion in the fourth quarter of 2021.
“The era of massive Big Tech stock buybacks is over,” said the Kobeissi Letter team.
The cash once allocated to buybacks is channeled into a series of AI projects among hyperscalers.
The AI investment figures are becoming more staggering by the day.
The combined capital spending of Amazon, Microsoft, Alphabet, Meta and Oracle is expected to reach around $800 billion in 2026.
This unprecedented infrastructure sprint is fueled by aggressive investments in power generation, data centers and advanced AI accelerators.
Wall Street analysts predict overall cohort capital spending will exceed $1.2 trillion in 2027.
Brian Sozzi is the editor-in-chief of Yahoo Finance, host of the Sozzi unleashed morning show, the ‘Powerful actors with Brian Sozzi podcast and member of the Yahoo Finance editorial leadership team.
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