Share repurchases by S&P 500 companies have lost momentum following a record-setting first half of 2025, according to analysts at Goldman Sachs.
In a client note, the bank highlighted that S&P 500 firms bought back nearly $550 billion of their own shares during the first six months of the year. However, buyback activity stalled in the second quarter compared with the prior year, affecting both the “Magnificent 7” mega-cap tech stocks and the remaining 493 companies in the index.
The S&P 500’s net buyback yield—a measure of shareholder value returned through stock repurchases—fell to 2%, the lowest level in two decades outside of recession periods, the Goldman analysts noted. The proportion of companies reducing share counts by 3% or more annually has also dropped, from roughly one-third a decade ago to about 20% today.
Such a decline in buyback impact is one way the recent surge in equity valuations has had a “negative reflexive impact” on market fundamentals, the analysts added.
Still, Goldman Sachs expects S&P 500 buybacks to rise 12% next year to $1.2 trillion, supported by strong earnings growth and enhanced cash flows from recent U.S. fiscal legislation, which “should stabilize the buyback yield” near current levels.
“But elevated interest rates and surging capex spending will constrain buyback growth unless equity valuations unexpectedly decline or artificial intelligence investment slows sharply,” the analysts warned.
They also cautioned that investors could see “less earnings per share accretion and slower EPS growth” if buyback activity remains muted.
“Weakening buybacks also indicate less share price support from corporate demand, including the downside cushion buybacks often provide during drawdowns,” the analysts said.
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