Record corporate earnings are keeping share buybacks on track across the broader U.S. equity market, even as artificial intelligence capital spending climbs sharply, according to a Deutsche Bank strategy note.
Capital expenditure across the S&P 500 has risen from an annualized pace of roughly $1 trillion to approximately $1.5 trillion over the past two years.
Around two-thirds of that increase stems from five hyperscalers: Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL), Meta Platforms (NASDAQ: META), and Oracle (NYSE: ORCL).
Those companies have pulled back on share repurchases as they redirect cash into AI infrastructure, data centers, and fresh capital raises.
Alphabet’s recently announced secondary issuance alone exceeds total S&P 500 secondary issuance recorded across the entire first quarter.
Heavy investment spending is simultaneously driving strong earnings growth among companies supplying AI infrastructure, including semiconductor makers, technology hardware firms, utilities, and data center REITs.
Many of those supplier companies have responded by increasing their own share repurchase programs, partially offsetting reduced buybacks from the hyperscalers themselves.
The rest of the S&P 500, which generates the bulk of corporate earnings, has seen quarterly net repurchases rise by nearly 30% over the past year, with further growth expected alongside earnings.
S&P 500 net buybacks reached a record $270 billion during the first quarter, with gross buybacks climbing to approximately $300 billion, remaining broadly in line with historical relationships to earnings and market capitalization.
Equity issuance has accelerated sharply during the second quarter, with several large IPOs and secondary offerings already completed and more expected in the months ahead.
Historical patterns suggest that previous waves of elevated share issuance have typically coincided with strong investor demand and positive equity market performance, reducing concern over near-term dilution effects.
Rising inflows into U.S. equities, elevated household cash balances, and continued earnings growth are all expected to provide a cushion against any pressure from increased new share supply.
