U.S. companies are repurchasing stocks at a record pace!

American companies are repurchasing stocks at an unprecedented pace, driving up stock prices and creating new market records.

According to data from Birinyi Associates, U.S. companies have announced $983.6 billion in stock buyback plans so far this year, marking the best start since records began in 1982, with total buybacks expected to exceed $1.1 trillion for the year.

The leaders of this round of buyback waves are mainly large technology companies and banks. Apple, Google's parent company Alphabet, as well as financial giants like JPMorgan Chase, Bank of America, and Morgan Stanley are actively repurchasing shares.

The core driving force behind this trend stems from abundant corporate cash flow. Strong earnings growth has brought substantial profits to companies, while ongoing uncertainty surrounding trade policies has led many companies to pause new investment plans, making stock buybacks a more attractive option for utilizing cash.

Analysts believe this buying frenzy is likely to drive stock indices higher, providing momentum for the current stock market rally. Currently, about 82% of the companies in the S&P 500 that have reported second-quarter results have exceeded expectations.

Tech and Financial Giants Lead the Buyback Wave

This stock buyback shows a clear concentration effect, with the top 20 companies accounting for nearly half of the total buybacks.

Large technology companies are the largest group in terms of buyback authorizations this year, with the AI boom boosting their market values while rapidly expanding their balance sheets.

In May, Apple committed to spending up to $100 billion to repurchase its own shares. According to its quarterly report released in July, the company holds $36.3 billion in cash and cash equivalents. Meanwhile, Alphabet also announced a $70 billion stock buyback plan and reported having approximately $21 billion in cash and equivalents.

Some of the largest banks in the U.S. are also at the forefront of this buyback wave. JPMorgan Chase stated in July that the company would repurchase $50 billion worth of stock. Bank of America announced a $40 billion stock buyback plan, while Morgan Stanley also reauthorized up to $20 billion in buyback capacity.

Strong Performance and Optimistic Signals

Analysts believe that the large-scale buybacks by companies are supported by strong operational performance. Jeffrey Yale Rubin, president of Birinyi Associates, stated:

“The situation is better than everyone thinks. Companies have ample cash, and they were in a healthy state even before the improvement in earnings.”

Bill Fitzpatrick, managing director of Logan Capital Management, believes that the active buybacks in the banking sector indicate that “consumers' financial conditions are quite healthy at the moment,” adding that “this is a good sign for the broader market.”

Additionally, the latest earnings season has also confirmed the strong performance of companies. According to data from FactSet, about 82% of the S&P 500 companies that have reported second-quarter results exceeded market expectations. **

It is worth noting that the company does not only repurchase shares when the market is at a high. According to data from S&P Dow Jones Indices, during the first quarter of this year when the market was relatively weak, S&P 500 companies repurchased $293.5 billion worth of stocks, setting a quarterly record, an increase of 21% compared to the end of 2024.

Skepticism Remains, Buffett "Stays Cautious"

Although the market generally views the boosting effect of buybacks positively, skepticism and caution also exist. Critics argue that large-scale buybacks in the context of already high market valuations merely artificially support the market.

Some analysts are concerned that companies' preference for buybacks over long-term projects such as factory investments may indicate that the trade war will put pressure on future economic growth. There are also views that companies often repurchase shares when prices are rising rather than when they are relatively cheap, making buybacks an inefficient use of cash.

It is noteworthy that some heavyweight investors did not participate in this round of buybacks. Berkshire Hathaway, led by Buffett, did not conduct any stock repurchases between April and June this year, marking the fourth consecutive quarter that the company has paused buybacks, with its cash reserves swelling to a record $344 billion by the end of June.

Larry Fink of BlackRock also issued a warning about stock buybacks in his annual letter to CEOs, stating that while they can provide short-term returns, they must be balanced with long-term growth investments.

Risk Warning and Disclaimer

The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investing based on this is at one's own risk