Big Tech's AI spending squeezes investor payouts, MarketWatch warns
MarketWatch reports that capital pouring into AI infrastructure at Microsoft, Alphabet, Meta and Amazon is squeezing buybacks and dividends. Capex is at record levels across the group. Investors are starting to reprice the slowdown in cash returns.
MarketWatch's analysis shows that capital spending on AI infrastructure at the largest US technology companies is visibly cutting into the cash returned to shareholders. Combined capex at Microsoft, Alphabet, Meta and Amazon set new highs in the last four quarters. Over the same window, growth in stock buyback programmes slowed noticeably.
The data show that money earmarked for AI data centres now overshadows dividends and repurchases. One analyst cited by Goldman Sachs said S&P 500 buyback volumes are being held back by AI outlays. Some portfolio managers argue that productivity gains may justify the bill over the medium term, though.
Forward earnings models suggest payout ratios will stay subdued next year. Nvidia's upcoming results are expected to illuminate the spending trajectory. Investors are preparing for an era in which companies that convert AI capex into durable revenue streams will stand apart from the pack.
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