Investors are increasingly prioritizing long-term growth through AI innovation over traditional shareholder payouts such as dividends and share buybacks, according to market analysts. The shift highlights the growing belief that companies failing to invest in artificial intelligence risk being left behind in what many consider the most transformative technological shift of our time.
Goldman Sachs recently lowered its forecast for U.S. share buyback growth to 9% from a previous 12%, citing the expected continuation of AI-driven investment well into 2026. “This is an AI-led bull market. The market rewards companies’ growth outlook around AI more than immediate shareholder returns,” said Ohsung Kwon, chief equity strategist at Wells Fargo.
Capital expenditure plans by S&P 500 companies have surged to $1.2 trillion this year, marking the highest level since Trivariate Research began tracking in 1999. The nine largest firms account for nearly 30% of this spending. Total shareholder returns over the 12 months ending June reached a record $1.65 trillion, with $653.86 billion in dividends and $997.82 billion in buybacks. Yet analysts say these payouts alone are no longer sufficient to attract long-term investors.
While Apple led the S&P 500 in capital returns in Q2, its shares have lagged the “Magnificent Seven” due to concerns over a lack of bold AI initiatives. In contrast, AI-focused companies like Alphabet, Meta, Microsoft, and Oracle have delivered double-digit stock gains, supported by cumulative capex spending of around $400 billion this year, including investments from Amazon.com and CoreWeave.
Other firms such as Salesforce, Accenture, and Cognizant have increased shareholder payouts, but their stock performances have struggled. Salesforce and Accenture fell more than 23% this year, while Cognizant dropped 12%, highlighting that capital returns alone cannot drive growth without a compelling AI strategy.
“For growth stocks, investment in the future matters more than buybacks and dividends,” said Chris Zaccarelli, CIO at Northlight Asset Management.
AI adoption is also spreading beyond tech giants. Banking, healthcare, and consumer staples are increasingly using AI to reduce costs. JPMorgan Chase invests about $2 billion annually in AI, while Goldman Sachs uses the technology for lending, regulatory reporting, and vendor management. Defense firms like Northrop Grumman and Lockheed Martin are embedding AI into autonomous systems, and biotech companies such as Schrödinger and Recursion Pharmaceuticals are leveraging AI for drug discovery. Retailers including Walmart, PepsiCo, and Mondelez are cautiously exploring generative AI for supply chain and customer engagement.
Despite these investments, analysts remain wary of an AI bubble. Some caution that as companies increase debt and pursue complex deals, market valuations may be tested by mid-2026. “By the second half of next year, investors may reassess whether the promise of AI is fully priced,” said Lisa Shalett, CIO at Morgan Stanley Wealth Management.
