Surging capital expenditures doubled to $556.9 billion across five major technology firms, resulting in a collective free cash flow deficit of $14 billion despite record operating cash generation. As a consequence, Alphabet and Meta completely paused repurchases after having deployed $66.5 billion in the previous year, leaving Microsoft as the only notable participant in buyback programs. Meanwhile, total shareholder payouts were buffered solely by dividend increases, which climbed to $37 billion across the group. Future bottom-line performance will face additional headwinds from escalating data center depreciation costs alongside massive ongoing capital budgets.
Key points
Artificial intelligence investments have outpaced record operating cash flows, forcing a…: Artificial intelligence investments have outpaced record operating cash flows, forcing a dramatic pullback in equity repurchase programs.
Tech giants are increasingly leaning on new debt issuances and share offerings to finance…: Tech giants are increasingly leaning on new debt issuances and share offerings to finance both operational needs and massive data center builds.
Future earnings per share will rely more heavily on fundamental operating profit growth w…: Future earnings per share will rely more heavily on fundamental operating profit growth without the tailwind of shrinking share counts.
Sources checked by our analysis pipeline: 1
Microsoft, Alphabet, Amazon, Meta and Oracle returned just 9.3% of the cash generated by their businesses through dividends and share buybacks in the first three quarters of 2026, down from 27.4% a year earlier, according to a Reuters analysis of LSEG data and company financial reports.
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The five companies generated a record $542.9 billion in operating cash flow during the period, an increase of 29% from a year earlier. However, capital expenditure doubled to $556.9 billion as companies accelerated investments in AI infrastructure, exceeding their combined operating cash flow for the first time in data dating back to 2011.
The spending surge pushed their combined free cash flow into a deficit of $14 billion, compared with a surplus of $143.5 billion in the same period last year.
Share buybacks bore the brunt of the cash squeeze, with repurchases plunging 83% to $13.6 billion from $81.8 billion a year earlier. Dividend payments, meanwhile, increased to $37 billion from $33.9 billion, reflecting companies' reluctance to cut payouts…
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