JPMorgan strategists, led by Nikolaos Panigirtzoglou, report that the technology sector’s financing burden tied to the AI buildout appears more manageable than previously feared. The bank’s analysis finds cash flow growth outpacing capital expenditure expansion this year, a dynamic that has improved the sector’s financing surplus and enabled larger returns of capital to shareholders.
The team estimates cash flow growth near 25% for the sector in the current year, while capex is tracking growth of about 20%. The difference between cash inflows and spending on fixed assets - the financing surplus - has widened as a result, enabling companies to increase buybacks alongside capital spending.
Reflecting that shift, JPMorgan raised its projection for buybacks and dividends to $900 billion for 2026, up from $700 billion projected for 2025. The bank noted that the acceleration in buybacks initially ran counter to expectations. With widespread concern about the costs of AI infrastructure, industry observers might have expected firms to conserve cash. But strategists attribute the behavior to an improved cash flow profile driven by several quarters of stronger-than-expected results.
In the bank’s words, this dynamic has helped the sector "to increase its financing surplus and to bolster its share buybacks." That phrase encapsulates the link JPMorgan sees between recent operating performance and corporate capital allocation decisions.
JPMorgan also adjusted its longer-term assumptions for the sector’s cash flows and capex. The bank had previously modeled cash flow growth of 20% per year against capex growth of 30%. After reviewing updated data, it now assumes cash flow growth of 20% annually and capex growth of 25% annually. Under these revised assumptions, the strategists project that the sector’s financing surplus will be drawn down over the coming decade and is expected to evaporate by 2030, although they emphasize the gap "does not turn into deficit."
To reconcile cash flows, buybacks, and persistent capital requirements, JPMorgan expects the sector to increasingly access debt markets. The bank projects net bond issuance by technology companies to rise from just over $200 billion this year to above $600 billion annually by 2030. It judged those issuance levels to be absorbable by the bond market, noting that a projected $216 billion of issuance in 2026 would represent roughly 4% of overall net bond issuance, rising to about 10% by 2030, a share the strategists called "still manageable."
The broader buyback picture, however, shows variation. Global buyback activity in the first quarter of 2026 roughly matched the pace from the prior year, but April brought a notable slowdown compared with April 2025. JPMorgan’s strategists linked the deceleration to a faster-than-expected recovery in equity prices to record highs, which reduced the urgency for companies to buy their own shares.
As context within the data cited by the bank, the strategists noted that a year earlier corporates had spent $480 billion repurchasing stock in April and May alone, after prices had fallen sharply following an earlier tariff-related market shock. That strong buyback activity last year contrasts with the more muted start to the April period this year.
Overall, JPMorgan’s analysis frames an industry in which improving cash generation has temporarily eased financing pressures associated with the AI investment cycle, enabled larger distributions to shareholders, and shifted some of the incremental financing toward debt markets as capital spending remains elevated. The bank’s revised projections imply the surplus will narrow over time, highlighting a transition in funding sources rather than an immediate structural shortfall.