Big Tech Cuts Buybacks as AI Spending Gobbles Cash
Major technology companies are scaling back share repurchase programs as massive AI infrastructure investments strain free cash flow, with Alphabet halting buybacks for the first time in a decade.
The AI arms race is forcing big tech to redirect capital from shareholder returns to infrastructure. Multiple reports indicate that Alphabet has paused its buyback program for the first time in ten years, a sign of how deeply AI capex is consuming cash flows.
Other industry giants are also slashing repurchases as they prioritize spending on data centers, chips, and AI research. The shift marks a notable departure from the past decade's emphasis on returning cash to shareholders through buybacks and dividends.
While the move bolsters AI development capacity, it may pressure stock valuations that had relied on buyback-induced EPS growth. Investors will be watching upcoming earnings for further details on cash allocation strategies.
Source: First Squawk