Investors are now telling companies to invest in growth, not their own stocks, Goldman Sachs finds

Goldman Sachs research finds investors increasingly prefer companies that reinvest in growth (capex and R&D) rather than returning cash via buybacks. The report notes capex rose 38% in Q1 versus buybacks’ 1%, and projects $2 trillion of corporate investment in 2026 (about one-third higher than 2025) while repurchases inch up to ~$1 trillion (+3%). AI “hyperscalers” are driving much of the shift—expected to contribute roughly $775 billion—after cutting buybacks 64% in Q1 even as their capex surged ~91% year-over-year. The study suggests markets are rewarding firms prioritizing secular growth, supporting the S&P 500’s record highs amid strong earnings (Q1 earnings growth ~17% and 12-month forward estimates +13%). Goldman still acknowledges a valuation premium for companies returning cash and those with solid balance sheets. eBay is highlighted as a top “buyback aristocrat” with an 8.9% buyback yield.