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Chart in Focus
$3 trillion: Where are U.S. firms reinvesting?
Dane Mott
Accounting Analyst
March 31, 2025

While international equities have garnered the spotlight amid policy uncertainty and tariff volatility, many U.S. companies remain in a strong financial position and are reinvesting in their businesses at an unprecedented rate.


U.S. corporate reinvestment reaches all-time high

A mountain chart shows the total reinvestment of companies in the S&P Composite 1500 Index (excluding financials) in billions of dollars from 1995 to 2024. The investment trend during the 29-year period illustrates significant increases in 2000, above $1.5 trillion, in 2008, near $1.5 trillion, in 2015, above $2 trillion, in 2018, near $2.5 trillion and in 2022, at nearly $3 trillion. Despite a minor dip in 2023, corporate reinvestment reached an all-time high at more than $3 trillion in 2024. A text to upper right part of the chart says: "Over $3T reinvested, mostly concentrated in the U.S."

Sources: Capital Group, S&P Global. Scope of U.S. reinvestment based on Capital Group estimates. Data from 1995 to 2024. 

The S&P Composite 1500 Index represents about 90% of U.S. public equities. Overall, S&P 1500 companies (excluding financials) reinvested just over $3 trillion in 2024, an all-time high. The largest components of this reinvestment surge were:  
 

  • $1.1 trillion for capital expenditures (36%) 
  • $667 billion for research and development (22%) 
  • $614 billion for mergers and acquisitions (20%) 

Tech spending on the AI infrastructure build-out is a big part of this reinvestment surge. Massive data center projects are under construction globally, with a high domestic concentration. While data centers are part of what anchors reinvestment in the U.S., policies from the Trump administration will likely encourage more domestic investment across economic sectors.


Surging reinvestment is not a theme that is isolated in the tech sector. Riding its success with revolutionary GLP-1 medicines for diabetes and weight loss, Eli Lilly plans to spend over $50 billion on pharmaceutical manufacturing facilities in the U.S. Similarly, Johnson & Johnson pledges to spend over $55 billion on U.S.-based manufacturing facilities.


Many of the largest and strongest U.S. public companies that carry little or no net debt are generating free cash flow at unprecedented levels and achieving returns on invested capital at outlier rates. These characteristics are propelling the efficiency of productive reinvestment in their companies.


The U.S. economy is simultaneously diverse and concentrated. The companies of the S&P 1500 represent $57.2 trillion in aggregate market cap, with strong representation across all sectors of the global economy. Yet 37% of the index weight is concentrated in a highly selective group of 14 companies, with individual market caps over $500 billion. This 1% of the index’s most valuable companies have an aggregate market cap of $22.6 trillion, 40% of aggregate market capitalization of this universe.


In the early days of President Donald Trump’s second term, uncertainty around U.S. policy, particularly regulation and tariffs, may prompt some management teams to be more cautious in their reinvestment activities.


However, many of the strongest U.S. companies may be more immune to weakness in the economy, due to their large net cash positions. Cash-rich companies are less likely to be sensitive to factors like rising interest rates or other potential challenges. I expect companies engaged in the AI arms race to continue to spend at unprecedented levels in the years ahead, regardless of the state of the broader macro environment.


Dane Mott is a global accounting analyst with 21 years of industry experience (as of 12/31/2024).  He holds an MBA in finance and management and a bachelor’s degree in accounting and finance, both from New York University.

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Chart in Focus
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U.S. Equities
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S&P Composite 1500 Ex-Financials Index: A float-adjusted market-cap-weighted index that replicates the performance of the U.S. equity market or benchmarks against a representative universe of tradable stocks, excluding members of the financial sector.

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