The largest U.S. tech companies are on pace to spend about as much money as it cost to build the domestic railroads, around five times the amount needed to create a federal highway system, and 10 times the cash needed to put a man on the moon.

And that's just this year.

The so-called Big Four hyperscalers -- Microsoft, Alphabet, Meta Platforms, and Amazon.com -- are forecast to spend at least $600 billion on artificial-intelligence buildouts in 2026. Add Oracle's projected spending and the tally rises to $650 billion, a near 60% increase from 2025 levels.

The staggering sums are requiring a host of changes in the financial models of these megacap tech giants, with a big increase in borrowing as well as possible equity capital raising efforts, expected to fill the gaps between spending and free cash flows.

Free cash flow, in fact, is expected to take a massive hit this year, with both Facebook parent Meta Platforms, according to analysts at Barclays, and Google parent Alphabet, according to Pivotal Research, likely to see free cash flows fall by around 90% this year.

Goldman Sachs sees collective capex for the Big Four eating up 92% of the cohort's free cash flow. Evercore ISI's Julian Emanuel sees aggregate free cash flow for the Big Four slumping to the lowest levels since 2022.

One casualty of the AI spending focus, and the erosion of one of the tech sector's principal advantages in terms of cash generation, could come in the form of shareholder returns.

"A new concern about mega-tech is that their massive AI cap spending plans have greatly slowed down their usual robust share buyback programs, which may account for part of the weakness the shares have seen," said Louis Navellier of Navellier Calculated Investing.

"While there is certainly uncertainty as to the timing and magnitude of the return on investment of the huge buildout costs, one only has to see the volatility that has run through various sectors over concerns of the impact that AI will bring to see how powerful the implementation of AI is expected to be," he added.

U.S. share buybacks topped $1.1 trillion last year, the highest on record, and have been cited as a key component in market performance for much of the past decade.

In fact, buybacks overtook dividends as Corporate America's preferred form of shareholder return in 1997, and have hardly looked back. That's largely because backing away from a buyback commitment carries much less weight than cutting or eliminating a dividend payment.

Buybacks also allow for more flexibility on size and timing and, perhaps most importantly are more tax efficient.

S&P Global's S&P 500 Buyback index, which measures the top 100 stocks with the highest buyback ratios in the broader benchmark, has outpaced the main S&P 500 by around 10 percentage points since the depths of the Covid pandemic.

And that time period is now back in focus.

Stock buybacks are trending at the lowest levels in more than five years this quarter, according to data from Citadel Securities, and hovering in the region of around $120 billion.

The number of companies unveiling plans to buy back shares also has declined, down 40% from the first quarter of 2025.

Apple, which is spending much less on AI capex than its Magnificent Seven peers owing to its preference for leveraging outside sources in key tech developments, authorized $110 billion in share repurchases last year and is expected to maintain a similar level of return in 2026. It's expected to be one of the best big tech performers this year.

"We expect the increasing scarcity of free cash flows and buybacks will strengthen the premium for companies focused on returning cash flows to shareholders," Goldman Sachs analysts said in a recent note.

For the others, however, it's a starkly different story. Alphabet's $185 billion in capex plans, and its plunging free cash flow, likely won't permit a repeat of last year's $63 billion in share repurchases.

Microsoft, while its board approved a $60 billion buyback plan in 2024, only repurchased $20 billion last year. Meta repurchased $25 billion.

Sonu Varghese, global macro strategist at Carson Group, argued that the biggest tech companies are quickly moving from "an asset-lite model, where they had enormous amounts of free cash flow, to an asset-heavy model that involves directing the cash towards capex."

"All this comes at the cost of returning money to shareholders ... and it does take out some support for these companies, as buybacks reduce supply and typically boost the stock price," he added.