The race among the “Magnificent Seven” tech giants to construct large AI data centers is having an unforeseen effect on share buybacks, a recent Goldman Sachs report reveals.
AI Data Center Push Slows S&P 500 Buybacks In 2025
The Magnificent Seven — Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Meta (NASDAQ:FB), and Tesla (NASDAQ:TSLA) also known as “hyperscalers,” have diverted significant funds towards building AI data centers, leading to a slowdown in share buybacks.
Companies usually boost their buyback activity by roughly 20% each year, but S&P 500 buybacks have slowed down in the latter half of 2025, noted Goldman’s Ben Snider and his team, reported Fortune.
“The 2Q earnings season reaffirmed the ongoing corporate focus on AI investment spending, which appears to be crowding out buybacks … S&P 500 companies reported 24% year/year capex growth during the quarter but reported -1% growth in gross buybacks," noted Snider.
The Magnificent Seven, accounting for nearly 30% of S&P 500 gross buyback spending, recorded no year-over-year buyback growth during the quarter. They have invested $368 billion in AI-related capital expenditures this year, which Goldman Sachs expects will probably limit a substantial increase in the buyback payout ratio.
Goldman Sachs projects S&P 500 buybacks to rise 12% to $1.2 trillion next year, though growth may be limited if AI-related capital spending remains high.
Goldman Sachs Note Clashes With June Analyst Report
Goldman Sachs report is in sharp contrast to Adam Turnquist, chief technical strategist at LPL Financial’s observation in June. According to Turnquist, corporate buybacks were key to the market's swift rebound in June, with S&P 500 firms authorizing a record $750 billion in repurchases until that period—up from about $600 billion in the same period in 2023 and 2024.
Most buybacks came from communication services ($210 billion), financials ($200 billion), and technology ($196 billion). However, he had mentioned at that point that most were announcements and the window for execution remains largely open.
Tech Giants Unveil Major Stock Buybacks In 2025
Tech giants like Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), and Nvidia (NASDAQ:NVDA) have announced billions in stock buybacks this year, marking their largest display of financial power to date.
Apple rolled out a $100 billion repurchase plan on May 1. As of August 2025, Apple had bought back $704 billion in stock over the past decade. Meanwhile, Nvidia greenlit its $60 billion program towards the end of August. Meanwhile, Alphabet announced a $70 billion buyback on April 24.
READ NEXT:
Image via Shutterstock
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
