Goldman Sachs: US share buybacks will exceed $1 trillion by 2025
With tech companies raking in profits and the Fed looking to cut rates, $Goldman Sachs(GS)$ predicts that stock buybacks in the US will soar to over $1 trillion for the first time in 2025.
Goldman Sachs said it expects share buybacks by $S&P 500(.SPX)$ companies to rise 16% to $1.08 trillion in 2025, and 13% to $925 billion in 2024.
Earnings growth is the main driver behind these insane buybacks, companies tend to buy back shares when they're confident about the future and think their stock is undervalued.
The benchmark S&P 500 index is up 7% this year, nearing all-time highs, thanks to the AI hype and bets on lower US interest rates. Some big banks think the index has even more room to run.
Goldman strategists point out that the rapid revenue growth of US tech companies should be enough to fund AI investments for years without hurting shareholder returns.
Stock buybacks are on a tear this year, and the big tech giants are leading the charge. $Apple(AAPL)$ just announced a $110 billion buyback plan, the biggest in US history, sending the stock to its best one-day gain in 18 months.
The announcement follows a $70 billion buyback program announced by Google parent $Alphabet(GOOG)$ $Alphabet(GOOGL)$ and a $50 billion buyback program announced by $Meta Platforms, Inc.(META)$ .
Scott Rubner, a technical analyst at Goldman, wrote in a note to clients:
About one-sixth of the expected buybacks this year are expected to occur in May and June. The US stock market is entering a favorable seasonal period. There are many bullish factors besides buybacks, including momentum traders ready to buy stocks and retail traders getting more active in the summer.
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- jinglese·05-09🚀LikeReport