The dividend-adjacent buzzkill
Big Tech’s AI arms race is turning into a very expensive hobby. According to Goldman Sachs, S&P 500 share buybacks are expected to grow only 3% this year as companies keep more cash on hand to fund AI infrastructure, data centers, and all the other shiny stuff that makes executives sound future-proof at conference presentations.
Why this matters to your portfolio
Buybacks matter because they’re one of Wall Street’s favorite forms of stock-market fertilizer. When companies repurchase shares, they can boost earnings per share and put a floor under stock prices. So if buyback growth slows, investors lose one of the market’s quieter but more reliable tailwinds.
What’s squeezing the generosity?
- A shaky economic backdrop that makes companies a little less eager to splash cash around
- AI-related capital spending that’s eating into the free-cash-flow buffet
- More caution from management teams that would rather hoard cash than look reckless if growth cools
The AI bill comes due
This is the irony of the AI boom: the same companies promising a productivity revolution are also spending like they just discovered a bottomless credit card. That tradeoff can be great for long-term platform dominance, but in the near term it can leave shareholders waiting for the payout they were hoping for.
Big picture: if buybacks keep slowing while AI spending stays elevated, investors may need to rely more on actual growth — not just financial engineering — to keep the rally alive.