Goldman Sachs strategists hiked their 2024 buyback forecast and introduced an outlook for 2025.
For this year, the investment giant expects S&P 500 repurchases to total $925 billion, which would mark a year-over-year growth of 13%. For 2025, that figure is anticipated to grow to $1.07 billion, translating to a 16% year-over-year rise.
“Solid earnings growth will be the primary tailwind to buybacks while elevated valuations and policy uncertainty will be headwinds. We expect buyback growth in 2024 will be driven largely by the mega-cap tech stocks,” the strategists said in a Wednesday note.
In 2023, the S&P 500 saw a notable 14% slump in stock buybacks, marking the second-largest yearly decrease since the Global Financial Crisis. In total, companies executed buybacks of $815 billion over the year.
This decline was primarily attributed to a stagnation in earnings growth, an increase in capital costs, and heightened macroeconomic uncertainties.
The Health Care, Information Technology, Financials, and Consumer Staples sectors were the main contributors to this downturn, accounting for almost 90% of the total reduction in repurchases.