The wave of stock buybacks in the U.S. market continues! Morgan Stanley expects buyback scale to increase by another $600 billion in the future
JP Morgan expects that the scale of stock buybacks in the United States may increase by $600 billion in the coming years, driving the stock market up. The strategist team predicts that buybacks will reach $1.5 trillion by 2025, and buyback activities will continue to support stock supply. Despite strong buyback activities, Goldman Sachs points out that the growth of buybacks may be constrained by high interest rates and increased capital expenditures
According to the Zhitong Finance APP, JP Morgan's strategists have stated that as stock buybacks limit the supply of stocks, the scale of stock buybacks in the United States may increase by $600 billion in the coming years.
Led by Nikolaos Panigirtzoglou, the team of strategists expects that after reaching a record $1.5 trillion in buybacks in 2025, its dollar value will further surge. This trend will be driven by a rebound in stock buyback volumes to pre-pandemic levels of 3% to 4% of stock market value (currently at 2.6%).
In a report to clients on Thursday, they wrote: "The force of buybacks in the U.S. has strongly driven the stock market up this year and may become even stronger in the coming years."
In the first eight months of 2025, global stock buybacks have already reached last year's total. The strategists noted that the combination of buyback activity and a sluggish IPO market has kept stock supply persistently negative.
Panigirtzoglou and his colleagues wrote: "From a supply perspective, publicly traded stocks continue to receive strong support, with the number of shares from listed companies continuing to shrink, marking the fourth consecutive year of this unprecedented trend."
Buybacks have been a powerful driving force behind stock performance this year. Year-to-date, U.S. stocks with the highest buyback-to-market-cap ratios have outperformed the equal-weighted S&P 500 benchmark index by nearly 6 percentage points.
However, other factors may suppress buyback activity. Goldman Sachs strategist Ben Snyder and his team stated earlier this week that buyback growth among S&P 500 companies has recently stalled after a record first half.
Goldman Sachs strategists wrote: "Unless stock valuations unexpectedly decline or AI investments slow sharply, high interest rates and surging capital expenditures will constrain buyback growth."
