Big Tech companies, including Oracle, Meta, Microsoft, Alphabet, Amazon, and Tesla, are facing steep losses as investors worry about the massive investments in artificial intelligence. Combined, these firms are expected to spend around $500 billion on capital investments in 2026, driving up depreciation and interest costs and pressuring return on equity (ROE).

The Nasdaq Composite has dropped 5.5% in November, led by large-cap tech and AI chip makers such as Nvidia and AMD. Analysts predict declining ROE for these tech giants over the next few years, reflecting concerns over profitability from AI investments.

Investors are rotating toward companies returning more cash to shareholders via dividends and buybacks. Examples include General Motors, Ford, GE Aerospace, Macy’s, American Eagle, General Mills, Pfizer, UPS, and Comcast. These firms typically have lower capital expenditures, manageable debt, and stable earnings, offering a less volatile and more predictable return.

For instance, American Eagle has returned $276 million in dividends and buybacks this year, invested only $90 million in capital, and plans to pay down its $77 million net debt. Analysts expect same-store sales growth to pick up to 2% in 2026, supporting higher profit margins and earnings.

Bottom line: Investors are favoring cash-generating, low-investment firms over tech giants heavily spending on AI, signaling a rotation from high-growth, high-risk bets to steadier, shareholder-friendly stocks.