The good news is, quarterly results from corporate America have been “exceptionally strong” this reporting season, to quote Goldman’s Ben Snider.

I’ll get into the details on that later, but suffice to say that with nearly two-thirds of the S&P 500 on the books, Q1 2026 is tracking to be one of the best quarters in a very long time, even if you exclude one-off items.

Given the strength of earnings, it’s not surprising that cash flow growth’s robust indeed.

As the figure above from SocGen’s Andrew Lapthorne shows, operating cash flow for non-financial US corporates is ~20%, which he noted is “equivalent to an annual increase of roughly $454 billion.”

What a windfall, right? Now if only you and I and everyone else accustomed to being paid out, directly or indirectly through a reduced float from buybacks, was reaping the benefits.

Instead, “our” money’s being plowed inexorably into capex, and I don’t mean new lathes. Rather, I mean data centers to power better chat bots and more chips so the “X” crowd can create better and better versions of those hugely popular meme videos depicting Donald Trump as a gangster rapper.

“The surge in capital spending comes at a cost to shareholder distributions,” Lapthorne went on, in the same note.

As the figure shows, buybacks are now declining (“Nooooo!”). When you include dividends, total payouts are flat YoY.

This is a highly unusual conjuncture. Typically, cash flow and buybacks expand and contract together. This is shareholder capitalism, after all.

If all this spending “delivers higher post-capex profits, shareholder returns should recover,” Lapthorne wrote. “[But] if it merely reflects the cost of staying relevant, the implications are more troubling.”