Big Tech Buybacks Shrink as Nasdaq Nears Correction

Two market signals show AI spending replacing buybacks while technology shares lose their footing.

📊 Big Tech buybacks shrink as AI capex exceeds cash flow

Decoded: Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Meta (META) and Oracle (ORCL) returned 9.3% of operating cash flow through dividends and buybacks in the first three quarters, down from 27.4% a year earlier, Reuters reported Friday. Operating cash flow rose 29% to a record $542.9 billion, but capital spending doubled to $556.9 billion, leaving a combined $14 billion free-cash-flow deficit versus a $143.5 billion surplus a year earlier.

Why it matters: Repurchases fell 83% to $13.6 billion, removing a source of support for per-share earnings. The AI buildout now has to produce profit growth while borrowing, equity issuance and depreciation become more important to returns.

📉 Nasdaq 100 falls 3.5% as October ends

Decoded: The Nasdaq 100 dropped 3.5% Friday and the Nasdaq Composite finished 7.8% below its closing high after its worst month since March 2025, according to Reuters. Intel (INTC) and Reddit (RDDT) each fell 29%, while Sandisk (SNDK) lost 13%. Microsoft, Meta, Amazon and Alphabet also fell 1% to 2% after larger declines earlier in the week.

Why it matters: The selloff shows investors demanding clearer evidence that AI investment will translate into cash returns. With four hyperscalers responsible for more than one-third of S&P 500 capital spending over the past year, weaker technology valuations can tighten financing conditions beyond the sector.

Stay decoded. See you tomorrow.

— The Get AI Decoded Team