Big Tech returns record-low cash to shareholders

Major US technology companies returned the smallest share of their generated cash to shareholders in at least 15 years during the first nine months of 2026. This sharp decline occurred even as these firms posted record operating cash flows, driven by massive increases in artificial intelligence spending.

The five largest firms, Microsoft, Alphabet, Amazon, Meta, and Oracle, returned 9.3% of their business-generated cash as dividends and buybacks. This figure represents a drop from 27.4% in the same period last year. The data comes from a Reuters analysis of LSEG data and company financial reports.

Operating cash flow for the group rose 29% to a record $542.9 billion. However, capital spending doubled to $556.9 billion. This was the first time in data going back to 2011 that these five companies spent more on capital projects than they generated in operating cash.

Share buybacks took the heaviest hit in this adjustment. The five companies cut repurchases by 83% to $13.6 billion, down from $81.8 billion a year earlier. Dividends, which investors view as a fixed commitment, actually increased to $37 billion from $33.9 billion in the prior year.

Alphabet and Meta have not repurchased a single share in 2026. In the first nine months of the previous year, those two companies bought back $66.5 billion in stock. Amazon has not conducted buybacks since 2022 and pays no dividend.

Microsoft accounted for nearly all of the remaining repurchases across the group. The company cut its buybacks to $4.4 billion in the September quarter, down from $5.7 billion in the same period a year earlier.

Because combined free cash flow turned negative, the $50.6 billion in total payouts was funded from cash reserves, borrowing, or share sales. Amazon’s capital spending in the third quarter reached $75.9 billion, which was almost 80% higher than the $42.4 billion generated by its operations. The company raised $48.1 billion in long-term debt during that quarter.

Alphabet also reported negative free cash flow. It raised approximately $12.4 billion from share sales and $29 billion from debt. Amazon expects total capital spending for the year to reach about $220 billion, while other firms have signaled further increases.

The reduction in buybacks removes a mechanical boost to per-share earnings. ING noted that Alphabet reduced its share count by 9.5% between the end of 2020 and 2025 through buybacks. This action provided roughly a 2% annual boost to earnings per share without requiring total profit growth.

Mark Schilsky, a technology sector specialist at JPMorgan, stated in a client note that investors care far more about earnings per share than free cash flow. MSCI found that technology and communication services stocks delivered a shareholder yield of just 0.28% in July, compared to 1.99% for the rest of the market.

Ehren Stanhope, co-head of investment management at Franklin Templeton, said the current regime may be characterized by greater equity and debt issuance. He described this as a request for capital from investors, changing the long-standing dynamic where companies returned excess capital to shareholders.