AI Spending War And AI Debt Pile-Up Could Squeeze Share Buybacks

Core Insights - The significant increase in stock prices over recent years has been largely driven by substantial corporate cash spent on share buybacks by major tech companies, totaling $1.1 trillion over five years [1][2] Group 1: Share Buyback Overview - From Q3 2020 to Q3 2025, six companies—Apple, Alphabet, Microsoft, Oracle, Meta, and Nvidia—spent a total of $1.1 trillion on share buybacks, reflecting actual expenditures rather than future announcements [2] - Apple led the share buyback efforts with $437 billion, followed by Alphabet at $281 billion, Meta at $151 billion, Microsoft at $107 billion, and Nvidia at $87 billion [4] Group 2: Funding and Debt Implications - Some share buybacks were financed through borrowed funds, resulting in significant debt on the balance sheets of these companies: Apple has $112 billion, Microsoft $120 billion, Meta $50 billion, and Alphabet $30 billion [5] - Nvidia has notably increased its buyback program in 2024, spending $43 billion on share buybacks over the past four quarters [4] Group 3: Strategic Shifts - Amazon has ceased its share buyback program since 2022 to allocate funds towards capital expenditures, particularly in AI infrastructure, indicating a potential trend for other companies to follow [3] - The ongoing competition in AI spending among these companies suggests a strategic shift where the focus may move from share buybacks to investments in technology [5]