Goldman predicts $1T in S&P 500 share buybacks

Companies will move close to the milestone this year before surpassing it in 2025.

US share buybacks are set to surpass $1 trillion next year for the first time ever, thanks to strong megacap technology earnings, strategists at Goldman Sachs Group Inc. said.

For 2024, the bank expects S&P 500 stock repurchases to grow by 13% to $925 billion and a further 16% in 2025 to just over $1 trillion, rebounding from last year’s decline. Easier lending conditions as central banks cut rates, as well as the removal of political uncertainty after the US election, should also help, Goldman added.

Technology revenue “will be supported by strong consumer spending and increased demand for AI-related products,” Goldman Sachs strategists including Cormac Conners and David Kostin wrote in a note.

As improving profit growth and expectations of interest rate cuts from the Federal Reserve prompt companies to ramp up share repurchases, Goldman sees cash-rich big tech firms in particular contributing a “substantial portion” of buybacks in 2024 and beyond.

A rally across tech stocks has boosted the S&P 500 Index to a record levels this year as investors continue to gravitate toward money-making businesses, while the economy remains resilient.

Recently, Goldman Sachs upgraded its S&P 500 earnings-per-share forecasts for 2024 and 2025 thanks to stronger-than-expected profits across the biggest US tech stocks.