Companies are rushing to buy back stock. But are they getting a bargain?

U.S. companies are executing stock buybacks at a record pace in 2025. Nearly $1 trillion in buyback announcements have been made so far this year, putting 2025 on track to surpass last year’s total. Tech giants are leading the way: Apple ($100B), Google ($70B), and Nvidia ($60B) all unveiled massive buyback programs this earnings season. Big banks like JPM ($50B), GS ($40B), WFC ($40B), and BAC ($40B) have also committed tens of billions. But with the market breaching all time highs every few days, there’s reason to worry about all of this optimism.

Buybacks matter to investors for several reasons. They reduce the number of shares in circulation, which can boost earnings per share, offer price support, and signal management’s confidence in the company’s outlook. But this year’s activity is highly concentrated—roughly 66% of all announced buybacks have come from a small group of mega-cap firms. For retail portfolios tilted toward tech and financials, this concentration means buybacks could have an outsized influence on performance.

Meanwhile, insider activity has begun to cool, with insiders mostly selling into the rally. However, insider selling tends to be a weaker signal than insider buying. One exception is Tesla, where  Elon Musk recently purchased 2.5 million Tesla shares, worth approximately $1 billion.

Buyback activity may also signal broader economic optimism. The Federal Reserve is currently cutting rates into a cyclical upswing, with some weakness but no definitive signs of the economy breaking. While nothing is definitive yet, rate cuts are generally seen as a bullish signal, especially for those rate-sensitive sectors like tech and financials.

Source: BofA

But some investors worry that the markets are overdue for a pullback. All that’s missing is a trigger. According to the BofA Fund Manager Survey, a record number of “smart money” fund managers now view the market as overvalued. We are seeing a broad rally across equities, crypto and gold, yet the issues that triggered April’s market downturn haven’t been resolved, and the macro environment has arguably grown more complex.

Even so, a major correction appears unlikely for now. While pockets of the market may look frothy, fundamentals remain broadly strong: earnings and margins are rising, U.S. consumers remain resilient, and macroeconomic conditions are stabilizing in both Europe and China. At this point, there’s little to suggest an imminent downturn.

Then again, in markets, you rarely see it coming until it hits you in the face.

What’s your take on these buybacks? Let me know by tagging me as @thedividendfund on eToro!

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