Big Tech giants seem to be spending everything they can on AI infrastructure. Alphabet’s (NASDAQ: GOOGL) spending caused its free cash flow (FCF) to come in at negative $5.9 billion last quarter, while Meta Platforms' (NASDAQ: META) FCF fell over 90% to $784 million. Microsoft (NASDAQ: MSFT) was the only AI hyperscaler that managed to post FCF above $1 billion. However, the figure still fell 23% year-over-year (YOY) to $19.6 billion.
Against this backdrop, something investors have become accustomed to seeing from these companies has started to fall by the wayside: share buybacks. As investors contemplate the outlooks of these names, this dynamic is worth recognizing as the AI buildout pressures their ability to return capital.
