Big Tech cuts buybacks 83% as AI-driven spending overtakes cash generation

Big Tech’s businesses are producing record cash, but shareholders are receiving a much smaller share. Microsoft, Alphabet, Amazon, Meta and Oracle cut combined buybacks 83% in the first nine months of 2026, according to a Reuters analysis published October 30. AI-driven capital spending exceeded their operating cash flow, leaving investors more dependent on future profits rather than cash returned today.

The squeeze did not come from falling cash generation. Operating cash flow—the cash produced by running the businesses—rose 29% from a year earlier to $542.9 billion. But capital spending, driven by the AI boom, doubled to $556.9 billion. That investment bill exceeded operating cash flow for the first time in Reuters’ data going back to 2011.

Reuters examined LSEG data and company financial reports. The five companies returned just 9.3% of their operating cash through dividends and buybacks, down from 27.4% a year earlier. It was the smallest share returned to shareholders in at least 15 years, despite the record amount flowing into the businesses.

Dividends survive; repurchases shrink

The retreat was concentrated in share repurchases, which fell to $13.6 billion from $81.8 billion in the same nine-month period last year. Dividends moved the other way, rising to $37 billion from $33.9 billion. Investors treat dividends as a commitment, making buybacks the first place for companies to pull back.

Alphabet and Meta have not repurchased shares in 2026, after spending a combined $66.5 billion on buybacks in the first nine months of 2025. Amazon pays no dividend and has not bought back shares since 2022. Microsoft accounted for nearly all the group’s remaining repurchases, but reduced its September-quarter buybacks to $4.4 billion from $5.7 billion a year earlier.

The investment bill reaches beyond operating cash

Free cash flow measures what remains from operating cash after capital spending. With that combined balance negative, the group’s $50.6 billion in dividends and buybacks was effectively funded from cash reserves, borrowing or share sales. The aggregate figures show a funding gap, rather than a lack of cash coming in from customers.

Amazon illustrates the size of that gap. Its third-quarter capital spending reached $75.9 billion, almost 80% more than the $42.4 billion generated by operations. It raised $48.1 billion in long-term debt during the quarter. Alphabet also had negative free cash flow and raised about $12.4 billion through share sales and $29 billion through debt.

A quieter boost to earnings disappears

Buybacks do more than return money to investors. When a company buys and retires its own shares, the same total profit is divided among fewer shares. Earnings per share can therefore rise without any increase in overall profit. Cutting repurchases removes that source of growth from the earnings figure investors watch.

Alphabet reduced its share count by 9.5% between the end of 2020 and 2025 through buybacks, according to ING’s calculation cited by Reuters. That alone added roughly 2% a year to earnings per share, even without profit growth. Without that lift, growth in per-share earnings must come from higher profits.

That test arrives as depreciation charges on new data centers begin to rise, adding pressure to reported earnings. Meanwhile, Amazon still expects about $220 billion in capital spending for 2026, and the other companies have signaled further increases. The investment demands are continuing even as the buyback cushion recedes.