Goldman Sachs expects corporate share repurchases to remain a powerful source of demand for U.S. equities in 2026, outweighing the increase in new shares coming to market. Although follow-on offerings and broader equity issuance have accelerated, the bank argues that issuance conditions remain orderly, while an estimated $1.4 trillion of buybacks should provide substantial support to the market.
Equity issuance climbs as companies raise more capital
U.S. companies raised $105 billion through follow-on equity offerings during the year through July, marking the strongest activity at this stage of a calendar year since 2021.
Total equity issuance, including initial public offerings, follow-ons, convertible securities and SPAC transactions, reached a record $252 billion during the second quarter.
That surpassed the previous quarterly high of $234 billion recorded in the first quarter of 2021.
Despite the headline increase, Goldman strategists led by Ben Snider said, “Follow-on equity issuance is increasing but represents a return to normal rather than a boom.”
The bank noted that both the number of transactions and issuance relative to total equity-market capitalisation remain below their long-term averages. Much of the recent increase has also been concentrated in a relatively small number of large transactions.
AI investment fuels demand for equity financing
The enormous capital requirements associated with artificial intelligence infrastructure are emerging as an important driver of new equity issuance.
AI-related transactions have accounted for approximately 40% of U.S. follow-on equity issuance this year.
Goldman expects that contribution to grow, saying the trend “will continue to increase going forward.”
Companies developing data centres and other AI infrastructure face enormous multi-year spending requirements, potentially requiring them to use several different sources of capital.
Equity issuance could therefore become an increasingly important complement to operating cash flow and debt financing.
Hyperscaler spending could exceed cash generation
Consensus forecasts indicate hyperscaler capital expenditure could reach $1.1 trillion in 2027.
That would exceed operating cash flow by approximately $150 billion before the companies are expected to become free-cash-flow positive again in 2028.
However, the eventual financing requirement could prove even greater.
“While recent earnings reports signal upside risk to estimates for hyperscaler revenues, many investors believe capex will register well above consensus forecasts,” Goldman’s strategists wrote.
If spending surpasses current projections, major technology companies may need to increase their reliance on external financing.
Debt expected to carry most of AI financing burden
Goldman expects debt markets to provide the largest share of funding required for the next stage of AI infrastructure expansion.
The bank’s credit strategists estimate hyperscalers could finance approximately 35% of their 2027 capital expenditure through debt.
That would translate into roughly $400 billion of global debt issuance.
Equity capital “should also continue to play a role,” according to Goldman, particularly for companies looking to finance multi-year investment programmes without excessively increasing leverage.
Selling equity could help preserve balance-sheet strength while also reducing the risk of encountering capacity constraints in debt markets.
Market conditions remain supportive for new offerings
The amount of additional equity entering the market will partly depend on investor appetite and broader stock-market conditions.
Goldman noted that follow-on issuance historically increases during periods of market strength.
Companies are also more likely to sell new shares when their valuations trade at a premium to the wider market, a pattern that has remained evident this year.
Despite the rise in issuance, the bank has found little evidence that investors are struggling to absorb the additional supply.
Neither offering discounts nor subsequent share-price performance currently shows “any abnormal sign of indigestion.”
S&P 500 buybacks continue to accelerate
Against the increase in equity supply, corporate repurchases remain an even larger source of market demand.
S&P 500 buyback growth was running at approximately 11% year over year during the second quarter, according to Goldman.
New share-repurchase authorisations have meanwhile reached a record of almost $1 trillion year-to-date.
These programmes provide a potentially important technical support for equities because companies buying their own shares directly reduce the amount of stock available to public investors.
$1.4 trillion in buybacks could absorb rising supply
Goldman estimates U.S. companies will repurchase approximately $1.4 trillion of shares during 2026.
That would be sufficient to offset around $700 billion of primary equity issuance as well as potential additional supply created when post-IPO lockup periods expire.
The overall supply-demand balance is becoming somewhat less favourable for equity investors as issuance rises, particularly as companies seek financing for AI investment.
However, Goldman does not expect that shift to overwhelm corporate demand.
With buybacks running at roughly twice the estimated level of primary issuance, corporate America should remain a significant net source of demand for U.S. equities in 2026.