Overview

Deutsche Bank’s strategy note observes that a surge in artificial‑intelligence‑related capital spending is unlikely to erode share‑buyback activity across the broader U.S. equity market because record corporate earnings continue to underpin shareholder returns.

Capital Expenditure Trends

Across the S&P 500, annualised capex has risen from roughly $1 trillion to about $1.5 trillion over the past two years. Approximately two‑thirds of this increase originates from five hyperscale technology firms—Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META) and Oracle (NYSE:ORCL). These companies are diverting cash into AI‑focused infrastructure and data‑center construction while simultaneously raising fresh capital.

Impact on Share Buybacks

The hyperscalers have markedly reduced their own share‑repurchase programmes as they allocate funds to AI projects. By contrast, firms that supply AI infrastructure—semiconductor manufacturers, technology‑hardware producers, engineering firms, utilities, independent power producers and data‑center REITs—have begun to lift their own buyback activity.

Aggregate Buyback Activity

The remainder of the S&P 500 continues to generate the bulk of corporate earnings and repurchases. Quarterly net repurchases by this broader group have risen by nearly 30 % over the past year, and further growth is anticipated alongside earnings expansion. Overall, S&P 500 net buybacks reached a record $270 billion in the first quarter, with gross buybacks climbing to approximately $300 billion. Current buyback levels remain broadly consistent with historical relationships to earnings and market‑capitalisation.

Equity Issuance Dynamics

Attention has shifted to a sharp acceleration in equity issuance during the second quarter, including a notable increase in IPOs and secondary offerings. Alphabet’s recently announced secondary issuance alone exceeds the total secondary issuance recorded for the entire S&P 500 in the first quarter. Although higher share supply could theoretically dampen net buybacks, past issuance waves have typically coincided with robust investor demand and positive equity‑market returns.

Outlook

Rising inflows into U.S. equities, elevated household cash balances and continued earnings growth are expected to provide support for buybacks despite the uptick in new share issuance.