Shifting Corporate and Investor Preferences for Cash Spending

Strong Q1 earnings growth of 17% is lifting the S&P 500, but a major rotation is occurring as companies prioritize AI-related capex over buybacks. Investors are currently rewarding growth investment over cash returns, though geopolitical risks are supporting a premium for high-quality balance sheets.

Key Takeaways

• 1.S&P 500 companies are rotating cash spending priorities away from buybacks toward capital expenditures (capex), driven largely by AI investment.
• 2.AI hyperscalers are the primary drivers of this trend, with 2026 capex forecast to reach $755 billion, an 83% increase from 2025.
• 3.Investors are rewarding growth-oriented investment (capex and R&D) over cash returns (buybacks and dividends), particularly within the AI complex.

Table of Contents

• How investors have been rewarding changing corporate spending priorities
• Earnings season summary
• S&P 500 earnings and return forecasts
• Biggest stock movers this week
• YTD absolute and risk-adjusted returns
• Sentiment and flows
• Economic growth
• Interest rates and financial conditions
• Market breadth and concentration
• Correlation and volatility
• IPO Barometer and mutual fund performance
• Earnings growth
• Valuations
• Sector returns, earnings, and valuations
• Thematic baskets

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