Big Tech stopped buying back its own stock

The cash-return machines became cash sinks. That's the quieter AI story this quarter.

In the first quarter, Google and Meta bought back none of their own stock. Zero. A year earlier they’d retired something like $15 billion and $13 billion of shares between them. A blank quarter isn’t a slow quarter. It’s a different machine.

For a decade Big Tech was the most dependable buyer of its own shares anywhere. Cash came in, share count went down, earnings per share got a quiet lift every quarter without anyone having to sell a single extra unit of anything. That has paused, and the reason is the build. When you’re spending to defend a moat, the money that used to buy back stock goes into data centers and power instead.

So the cash-return machine became a cash sink. Hyperscaler capex is running toward three-quarters of a trillion dollars this year, and some of these companies are now plowing back nearly all their operating cash flow just to keep their place in line. One of them closed its fiscal year with badly negative free cash flow. To cover the gap, names that used to retire shares are issuing bonds by the tens of billions. The return machine turned into a borrower.

Here’s the part that doesn’t make the front page. While the famous names stopped shrinking their share counts, a less glamorous set of companies kept doing the boring thing: buying back stock, retiring shares, nudging earnings per share higher by plain arithmetic. No revolution required. Just fewer shares outstanding each year.

That’s the tension under the market right now. On one side, a story you pay a rich multiple for and hope it pays off. On the other, arithmetic that mostly does what it says. Stories are the most expensive thing on the exchange. Arithmetic is one of the cheapest. And in a market this fixated on the story, the arithmetic has been doing real work in the dark.

None of this is a reason to walk away from AI. It’s a reminder that “where is the cash actually going?” beats “what’s the narrative?” nine times out of ten. Which companies are turning buybacks into real ownership — and where we’d actually put the money — is the desk’s work at moatpeak.com. The pattern is the free part.

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Educational research only — not investment advice. MoatPeak Group, UAB.