# The AI spending boom is forcing a rethink on stock buybacks: One Big Investment Idea > Source: > Published: 2026-07-31 10:00:00+00:00 [Stock buybacks](https://www.investopedia.com/terms/b/buyback.asp) are near historic highs. But their biggest benefit to investors — making each remaining share more valuable — is fading. For years, companies reduced the number of shares available to investors. With the same profit divided across fewer shares, each share represented a larger claim on the business. When the same profit is divided among fewer shares, earnings per share rises even if the company itself is not earning much more. Now the S&P 500's total share count is rising again, despite companies continuing to spend heavily on repurchases. The difference between buyback spending and actual share reduction is crucial. Companies can announce enormous repurchase programs while also issuing new stock through employee compensation, acquisitions, initial public offerings, and [secondary sales](https://www.investopedia.com/terms/s/secondaryoffering.asp). That is especially relevant in Big Tech, where stock-based compensation is a major part of employee pay. Buybacks show how much companies spend. The total share count shows whether those purchases actually leave fewer shares in investors' hands. The shift is arriving as companies redirect more cash toward [capital expenditures](https://www.investopedia.com/terms/c/capitalexpenditure.asp) — or capex — for data centers, chips, servers, networking equipment, and power. As Jurrien Timmer, Fidelity's director of global macro, [recently wrote](https://www.linkedin.com/pulse/contrasting-patterns-week-71326-jurrien-timmer-cxhdc/), the "current capex boom is taking away the bandwidth for companies to buy back their shares." Fidelity estimates buybacks have declined to roughly 31% of earnings as borrowing rises and companies invest in AI infrastructure. The largest technology companies can still spend on both. But the cushion is narrowing. Alphabet ([GOOGL](https://finance.yahoo.com/quote/GOOGL/)), Amazon ([AMZN](https://finance.yahoo.com/quote/AMZN/)), Meta ([META](https://finance.yahoo.com/quote/META/)), Microsoft ([MSFT](https://finance.yahoo.com/quote/MSFT/)), and Oracle ([ORCL](https://finance.yahoo.com/quote/ORCL/)) collectively generated far more cash from their businesses than they spent building data centers and buying equipment only a few years ago. Current estimates show those totals converging as the AI build-out accelerates. When capex consumes most of the cash generated by the core business, management has fewer choices. It can reduce buybacks, spend down reserves, borrow more, or issue stock. Alphabet offered a vivid example with its planned [$80 billion stock sale](https://finance.yahoo.com/markets/article/alphabets-80-billion-stock-sale-shows-how-expensive-ai-is-getting-chart-of-the-day-140153236.html), coming as the company ramps up AI investment after years as one of the market's largest buyers of its own shares. The cash pressure is visible elsewhere. Amazon's free cash flow fell 95% over the past year, even as operating cash flow rose, because the company spent nearly all the additional cash on AI infrastructure. History shows why the payoff cannot be assumed.