JPMorgan Sees Record US Buybacks Jumping by Another $600 Billion

JPMorgan strategists project US share buybacks to surge by an additional $600 billion, reaching beyond the record $1.5 trillion expected by 2025. This increase, driven by a rebound to pre-pandemic repurchase volumes of 3-4% of equity market cap (from 2.6% now), is anticipated to further limit the supply of stocks.

Analysis

JPMorgan Chase & Co. strategists, including Nikolaos Panigirtzoglou, project a significant increase in US corporate share buybacks, forecasting an additional $600 billion in repurchases over the coming years. This surge is expected to build upon a base that is already anticipated to reach a record $1.5 trillion by 2025. The core driver for this projection is a normalization of repurchase volumes to pre-pandemic levels, specifically moving from the current 2.6% of equity market capitalization to a range of 3% to 4%. The primary market-level implication of this trend is a material reduction in the net supply of publicly traded stocks, which acts as a powerful technical support for the broader equity market.

Key Decisions for Investors

• The projected surge in buybacks provides a strong technical tailwind for US equities, suggesting investors could maintain or increase exposure to the broad market as reduced share supply is likely to support valuations.
• Consider overweighting positions in companies with established, large-scale share repurchase programs, as they are direct participants in this trend and signal strong management confidence in their future cash flows and current valuation.
• Investors should monitor corporate earnings and cash flow statements closely, as the realization of this bullish forecast is contingent on continued profitability and the willingness of management teams to deploy capital for buybacks rather than other uses.