Barclays says a sharp slowdown in share buybacks by major U.S. technology companies is unlikely to weigh significantly on the broader equity market.
The brokerage argues that investors have increasingly rewarded growth over capital returns as artificial intelligence spending accelerates across the sector.
Big Tech companies are shifting capital allocation priorities to fund a multiyear AI infrastructure buildout, with hyperscaler capital expenditures expected to exceed $1 trillion annually by 2028.
Buybacks by the largest technology firms have already fallen about 17% over the past year, even as repurchases across the rest of the technology sector and the broader S&P 500 have continued to rise.
The six largest technology companies, including Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), Alphabet (NASDAQ: GOOG), Amazon, and Meta, accounted for more than a quarter of all S&P 500 buybacks in 2024 and 2025.
The decline reflects growing funding needs for AI investments, with companies increasingly relying on debt issuance, equity offerings, convertible securities, and operating cash flow to finance expansion.
Barclays also noted that reduced stock-based compensation following aggressive workforce reductions may have lessened the need for buybacks among major technology firms.
Valuations for Big Tech have compressed from around 33 times earnings two years ago to below 25 times as investors factor in a prolonged and capital-intensive investment cycle.
Despite the pullback in buybacks, Barclays argued that the market’s focus has shifted decisively toward growth and long-term AI-driven returns over near-term shareholder distributions.
Since the launch of ChatGPT in late 2022, the S&P 500 Buyback Index has underperformed the broader S&P 500 by roughly 30%, a stark indicator of shifting investor priorities.
The data suggests investors are placing considerably greater value on companies reinvesting capital into AI-driven expansion rather than returning cash to shareholders through repurchase programs.
With hyperscaler spending projected to surpass $1 trillion annually within two years, the structural shift away from buybacks among the largest technology names appears set to continue well into the decade.
