Quote · Excess Returns
Andy Constan on the SpaceX IPO, AI CapEx, and the End of the Buyback Tailwind
Where this was said
From stock buybacks to new equity supply
At 24:52 · chapter starts 18:44
Andy details how buybacks reduce share supply while issuance does the opposite, and quantifies the 2023–24 baseline of ~2% of GDP in net share reduction before the current reversal. [1] — Andy Constan "Net share supply: ~2% of GDP reduction (2023–24): During 2023 and 2024, share repurchases ran at roughly 2% of GDP, representing a net redu…" 21:15
The market has flipped. For years, buybacks reduced share supply by roughly 2% of GDP annually, acting as a structural tailwind. Now Google has canceled buybacks and issued $80B in stock. Meta and Amazon are following. The net swing is $600–$700 billion — entirely because AI needs to buy chips.
During 2023 and 2024, share repurchases ran at roughly 2% of GDP, representing a net reduction in share supply of about 2% of GDP.
Google canceled its share repurchase program and then issued $80 billion of common stock, exemplifying the broader buyback-to-issuance shift driven by AI CapEx.
The market has shifted from a ~$600–$700 billion net share reduction annually to effectively zero or net issuance, driven by AI CapEx funding needs.
One word: CapEx. Every market anomaly — declining buybacks, surging corporate bonds, rising equity issuance, growing RSU awards — has the same root cause. Hyperscalers are burning through free cash flow, shrinking balance sheet cash, and tapping every capital source to buy chips and build data centers.
