Wolfstreet·2025-11-24 23:22Core Insights - Major tech companies have spent a total of $1.1 trillion on share buybacks over the past five years, significantly impacting stock prices [1][2] - The trend of share buybacks may be at risk as companies shift focus towards capital expenditures, particularly in AI infrastructure [10][11] Share Buyback Spending - Apple led the share buyback spending with $437 billion, followed by Alphabet ($281 billion), Meta ($151 billion), Microsoft ($107 billion), and Nvidia ($87 billion) [3] - Nvidia has recently ramped up its buyback program, spending $43 billion over the past four quarters [3] Funding Sources for Buybacks - Some share buybacks were financed through debt issuance, with Apple holding $112 billion, Microsoft $120 billion, Meta $50 billion, and Alphabet $30 billion in debt [4] - In the last three months, five companies issued $88 billion in new investment-grade bonds to fund various expenditures [5] Shift in Capital Expenditures - Companies are increasingly investing in AI-related capital expenditures, with four major firms spending $114 billion in Q3 alone and projected to exceed $400 billion for the year [4] - This shift in focus may lead to reduced share buybacks as companies prioritize AI investments over returning cash to shareholders [11][12] Off-Balance-Sheet Debt Concerns - Meta has utilized a strategy to keep a $27 billion AI bond sale off its balance sheet to protect its credit rating [7] - Rating agencies are expressing concerns about the opacity of off-balance-sheet debt and its implications for financial transparency [8] Future of Share Buybacks - Companies may eventually reduce or halt share buybacks as they allocate more resources to AI spending, which could impact stock prices negatively [12][13] - Amazon has already ceased share buybacks in favor of capital expenditures, indicating a potential trend among other companies [10]