Stock Buybacks Are Quietly Powering Wall Street's 2025 Rally

A powerful yet underappreciated force may be behind Wall Street’s 2025 rally: a flood of corporate share buybacks, reaching levels not seen in years.

As of June 9, the S&P 500 and Nasdaq 100 are both trading just 2% below all-time highs, a dramatic shift from the March correction and the tariff-induced volatility that rattled markets just two months ago.

"Corporate buybacks, arguably one of the less-discussed catalysts, likely provided an additional boost to the market's quick recovery," said Adam Turnquist, chief technical strategist at LPL Financial, in a recent note.

Buyback Authorizations Surge to Multi-Year High

As of June 5, S&P 500 companies had authorized $750 billion in share repurchases year-to-date, a record pace compared to the roughly $600 billion authorized by this time in both 2023 and 2024, based on aggregated data from LPL Financial.

The lion's share of buyback programs came from three heavyweight sectors: communication services with $210 billion, financials with $200 billion and technology at $196 billion.

These figures reflect announced intentions—not necessarily actual repurchases—but Turnquist said the window for execution is "nearly wide open".

2025 Confirms Buyback Appetite

Buybacks weren't just authorized—they were executed in size. In the first quarter of 2025, S&P 500 companies repurchased $283 billion in stock, marking a 23.6% increase from the prior quarter and a 26.9% rise over last year. Compared to 2023, the increase is even steeper, at 38.4%.

The top four contributors—Apple Inc. AAPL, Meta Platforms Inc. META, Alphabet Inc. GOOGL and Nvidia Corp. NVDA—accounted for nearly $73 billion in combined buybacks thus far this year.

Large banks including JPMorgan Chase & Co. JPM and Bank of America Corp. BAC added another $18 billion in total.

Do Buybacks Actually Work?

Multiple long-term studies suggest they do.

A 2021 study from the U.S. Chamber of Commerce Center for Capital Markets Competitiveness found that buybacks improved liquidity, reduced volatility, and saved retail investors between $2.1 billion and $4.2 billion in transaction costs since 2004.

Separately, data from S&P Global show that since 2000, the S&P 500 Buyback Index—which tracks the top 100 repurchasing companies by buyback ratio—has gained over 1,000% in price return, excluding dividends.

That's almost double the return of the equal-weighted S&P 500, which rose 536%, and far above the 310% gain in the cap-weighted index.

For comparison, the S&P 500 Dividend Aristocrats Index, which includes companies that have raised dividends for 25 consecutive years, gained 537% over the same period.

Will AI Capex Disrupt The Buyback Boom?

Despite the record pace, buybacks are now competing with a new capital priority: artificial intelligence investments.

LPL's data show that S&P 500 companies are increasingly allocating excess cash to capital expenditures, especially in tech.

Four hyperscalers—Amazon, Alphabet, Meta and Microsoft Corp. MSFT—are projected to spend $333 billion on AI-related investments this year, a 35% jump from 2024.

That shift could limit the headroom for buybacks going forward, especially in tech where the overlap is strongest.

Yet, for now, the firepower remains. "Corporate America has a substantial amount of stock to repurchase," Turnquist said, adding that the combination of available capital and improved market conditions continues to favor share repurchases in the near term.

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Image created using artificial intelligence via Midjourney.