Overview
Barclays' latest market commentary observes that major U.S. technology firms have reduced their share repurchase programmes as artificial‑intelligence (AI) spending accelerates. Over the past twelve months, buybacks by the largest technology companies have declined roughly 17%, even though repurchases across the broader technology sector and the S&P 500 have continued to increase.
Capital Allocation Shift
The six biggest tech companies – Apple Inc., Microsoft Corp., Nvidia Corp., Alphabet Inc., Amazon.com Inc. and Meta Platforms Inc. – together accounted for more than 25 % of all S&P 500 buybacks in 2024 and 2025. The reduction reflects heightened funding requirements for multiyear AI infrastructure projects, with hyperscaler capital expenditures projected to exceed US$1 trillion annually by 2028. To meet these needs, firms are turning to debt issuance, equity offerings, convertible securities and operating cash flow rather than relying on buybacks.
Compensation and Valuation Effects
Barclays notes that reduced stock‑based compensation following aggressive workforce reductions has lessened the demand for share repurchases. At the same time, valuations for the Big‑Tech group have compressed from around 33 times earnings two years ago to below 25 times earnings as investors incorporate the longer AI investment horizon into pricing.
Market Performance
Since the launch of ChatGPT in late 2022, the S&P 500 Buyback Index has lagged the broader S&P 500 by approximately 30 %, indicating that investors are rewarding companies that reinvest capital into AI‑driven growth rather than those returning cash to shareholders.
Outlook
Barclays concludes that the slowdown in buybacks by the largest technology firms is unlikely to weigh significantly on the overall equity market, given the market’s decisive shift toward growth‑oriented capital allocation.