Investors are increasingly prioritising U.S. companies that channel capital towards artificial intelligence innovation over those focused on traditional shareholder payouts, such as dividends and buybacks. This shift occurs even amidst ongoing debates about soaring valuations and the potential for an AI bubble. The focus is on long-term growth, recognising that companies which neglect AI investment risk falling behind in this transformative technological era.
Goldman Sachs has lowered its forecast for U.S. share buyback growth to 9%, down from a previous 12%, anticipating that the wave of AI-driven investment will extend into 2026. According to S&P Global data, total shareholder returns for the year ending in June reached a record $1.65 trillion, comprising $653.86 billion in dividends and $997.82 billion in share buybacks. However, these substantial payouts have not been enough to attract long-term investors on their own.
While companies like Salesforce and Accenture have increased shareholder payouts, their stock performance has lagged, reinforcing the idea that capital returns alone are insufficient without a compelling AI strategy. Conversely, shares of AI hyperscalers like Alphabet, Meta, Microsoft, and Oracle have recorded double-digit price returns this year, surpassing broader market gains. JPMorgan Chase, a banking giant, is investing approximately $2 billion annually in developing AI technology.
Analysts remain hesitant to definitively label the current AI boom as a bubble, but many caution that a correction could occur as companies increasingly rely on debt and complex deal-making. The market continues to reward companies’ growth outlook around AI, placing less emphasis on immediate shareholder returns. Capital expenditure plans reported by S&P 500 companies have reached $1.2 trillion this year, the highest since 1999, with the top nine companies accounting for nearly 30% of the share.
