Zhi Tong Cai Jing·2025-11-13 15:35Core Viewpoint - The long-standing trend of stock buybacks in the U.S. market is at risk of being overshadowed by the capital expenditures associated with artificial intelligence (AI) as tech giants compete fiercely in this area [1][2]. Group 1: Impact of AI on Corporate Cash Flow - Companies are likely to divert significant portions of their free cash flow towards investments in data centers, chips, and model training, which may limit their ability to execute stock buyback programs [1][2]. - Major tech firms such as Amazon, Alphabet, Meta, Microsoft, and Oracle are experiencing notable pressure on their free cash flow growth, contrasting with the rising scale of buybacks among S&P 500 companies [2][5]. Group 2: Economic Implications - The surge in AI capital investment, combined with potential economic growth and inflation, could lead to a "de facto tightening" of financial conditions, altering market expectations regarding future interest rates [1]. - If economic growth and inflation strengthen, the wealth effect from the stock market could further loosen financial conditions, compelling the market to reprice the Federal Reserve's policy path, thereby limiting anticipated easing [1]. Group 3: Future of Stock Buybacks - The trend of corporate stock buybacks, a significant driver of the U.S. stock market's growth over the past 15 years, may face a slowdown or even a retreat due to the demands of AI investments [1][2]. - The ongoing expansion of capital expenditures for AI infrastructure could lead to wider credit spreads and increased financing costs for companies [1].