One unexpected side effect of the Magnificent Seven’s race to build massive AI data centers—and source the power necessaryed to run them—is that they are reducing share purchasebacks to fund these projects, according to Goldman Sachs.
Companies routinely purchase back their own shares to incentivize investors to hold on to them; reducing the number of shares available increases earnings per share and supports boost their own stock prices.
Normally, companies increase their purchaseback activity by about 20% each year, according to a note written by Goldman’s Ben Snider and colleagues. But in the second half of this year, purchasebacks across the S&P 500 ground to a halt.
“S&P 500 companies repurchased shares at a record pace in 1H 2025, but purchaseback growth has recently stalled. S&P 500 purchasebacks in 1H 2025 totaled nearly $550 billion ($490 billion net of equity issuance). However, purchasebacks in 2Q 2025 were flat y/y for the S&P 500, the Magnificent 7, and the S&P,” Snider wrote. The Magnificent 7 companies are Nvidia, Microsoft, Apple, Alphabet, Amazon, Meta, and Tesla.
“The Magnificent 7, which account for roughly 30% of S&P 500 gross purchaseback spfinishing, posted 0% year/year purchaseback growth during the quarter,” Snider wrote.
The purchasebacks are on hold becaapply the money is going into AI, Snider argues. So far this year, the “hyperscalers” (Amazon, Alphabet, Meta, Microsoft, and Oracle) have deployed $368 billion in capital expfinishiture, building their AI capabilities, Goldman previously estimated.
“Surging capex spfinishing related to AI will likely prevent a major increase in the purchaseback payout ratio. The 2Q earnings season reaffirmed the ongoing corporate focus on AI investment spfinishing, which appears to be crowding out purchasebacks … S&P 500 companies reported 24% year/year capex growth during the quarter but reported -1% growth in gross purchasebacks,” Snider wrote.
Goldman forecasts that S&P 500 purchasebacks will launch rising again next year by 12% to $1.2 trillion, but growth will be limited unless AI capital expfinishitures are scaled back.
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