Big Tech returns smallest share of cash to shareholders in 15 years, given AI spending
The five major US technology companies reported record cash generation in the first three quarters of 2026, yet returned the lowest share to shareholders in over a decade due to booming artificial intelligence (AI) spending. This shift threatens a key support for tech share prices, with investors now relying more on profit growth from heavy AI investments.
Microsoft, Alphabet, Amazon, Meta, and Oracle together returned only 9.3% of their cash to shareholders, down from 27.4% a year earlier. While operating cash flow surged 29% to a record $542.9 billion, capital spending doubled to $556.9 billion, creating a combined free cash flow deficit of $14 billion. Buybacks, heavily impacted by this, fell 83% to $13.6 billion from $81.8 billion a year earlier.
Companies have cut repurchases and shifted to raising capital through debt and share sales. Some, like Alphabet and Meta, no longer repurchase shares. The impact goes beyond the dollar figures, as buybacks artificially inflated per-share earnings. Without this boost, stronger profit growth becomes crucial. Investors are increasingly concerned about EPS over FCF.
With no end in sight for these spending increases, tech shareholders face a different bargain, potentially with more reliance on equity and debt issuance.
Written by urgent.news from CNA - Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
