When corporations just invest because they have money, there is a gigantic agency problem, and executives have a tendency to burn shareholder value on vanity projects and fancier headquarters.
Stock buybacks are exactly what I want wealthy companies to be doing with money they don't have a high expected ROI for.
* they've done about $152B in stock buybacks since 1990 https://www.intc.com/stock-info/dividends-and-buybacks. I think... ~$108B in the last decade.
* during the same time period they fell behind TSMC and SEC in semiconductor fab , missed the boat on mobile (couldn't really capture the market for either smartphone or tablet CPUs), and are missing the boat w/AI training https://www.hpcwire.com/2025/07/14/intel-officially-throws-i...
Discussion of Intel's buyback behavior as excessive and wasteful was also picked up on during all the discussion of CHIPs subsidies last year: https://news.ycombinator.com/item?id=39849727 see also https://ips-dc.org/report-maximizing-the-benefits-of-the-chi...
The existence of markets Intel didn't dominate does not, to me, imply that it would have been a good use of resources to throw (more) money at the markets they didn't dominate. Not every company is good at every business, even if they dominate some seemingly related market.
There's also the matter that dividends are meant to be long-term and recurring. So it's not great for one-time windfalls.
This anti stock buyback meme is silly. It’s like people who are anti shorting stock. Companies list on the stock exchange in order to sell their own stock to raise capital. If they have excess capital, absolutely they should be able to buy back their stock. And buy other companies stock if they see it as undervalued also.
A great case to see the absurdity of it is Intel, doing stock buybacks for almost a decade to push its stock price up while flailing around and losing its edge, if it was paying high dividends while flailing around then major shareholders would be asking why the fuck would they be paying dividends while the business is losing competitiveness but by doing stock buybacks it kept investors "happy" so they could jump ship and let the company fail on its own.
Stock buybacks have perverse incentives, everyone responsible for keeping the company in check gets a fat paycheck from buybacks: executives, major investors, etc., all financed by sucking the coffers dry. The buybacks at Intel just made the company as a whole lose money, they bought back stocks when they were high and it only dipped since then (10y window).
The fact that c-suites authorize buybacks largely to boost the stock price in order to trigger their own performance bonuses tied to the stock price only highlights that point.
If you did something even remotely similar, you would be prosecuted for fraud, because it's fraud.
1) Wrongful or criminal deception intended to result in financial or personal gain.
2) A person or thing intended to deceive others, typically by unjustifiably claiming or being credited with accomplishments or qualities.
The problem though is that the incentive structure is so that none of the involved parties has any disincentive, let alone an adversarial incentive to end the practice, let alone has standing to do anything legally, short of sabotaging their own stock value.
It's a totally perverse and corrupted incentive structure, similar to why both Trump or Biden, or Democrats or Republicans have the real will or interests in ... non of the involved parties have any interest in revealing the rot and corruption, and all parties involved have every incentive to keep it all under wraps, suppressed, covered, up and distracted from.
In some ways, a civil activist organization could in fact buy a single stock of one of the most egregious stock buyback stock price inflation causing corporations and sue them for fraud and deception, but it would have to come with a claim at manipulation of the market due to fraudulent manipulation of the price discovery process similar to a light version of cornering the market through restriction of supply, i.e., cartel behavior.
If there is any fraud, it would be having performance bonuses tied to individual stock price, rather than market cap. But blaming the buyback itself, is short-sighted.
There is zero fraud implied or even suggested by stock buybacks. They are heavily-publicized-in-advance returns of capital to shareholders. That's it. The sales are often offset by the creation of new stock via RSUs, and in that case just reduce the dilution intrinsic to RSUs.
Shareholders want executives to be incentive-aligned to reduce agency problems. Stock based compensation furthers that goal. If a manager doesn't think they have a better use of spare capital than returning it to shareholders, returning the capital is exactly what shareholders want. There's nothing nefarious here.
Investors in a corporation don't want individual teams to spend money "just because it was budgeted, even if we didn't have a good thing to spend it on".
I, as a manager of a team at a corporation, of course have a partially adversarial relationship with investor goals; I want my team to be happy, in part because happier teams often are more productive, but in large part also because it's just nice to spend my work life working side by side with people who are enjoying their perks.
If my entertainment budget directly (or even partially) reduced my team's bonus pool, that would be crappy for team cohesion, but it would probably make me think more carefully about taking everyone out to lunch.
