LIVE MARKETS-Goldman Sachs sees $1.7 trillion buyback wave cushioning hit from stock supply surgE

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GOLDMAN SACHS SEES $1.7 TRILLION BUYBACK WAVE CUSHIONING HIT FROM STOCK SUPPLY SURGE

US companies are poised to return a record $1.7 trillion to shareholders through stock buybacks in 2027, potentially shielding market valuations from the dilutive impact of near-record equity issuance, according to Goldman Sachs.

The brokerage expects a sharp rise in the supply of publicly traded shares next year. While such an increase typically weighs on stock prices, corporate buybacks, alongside elevated demand from households and foreign investors, should be sufficient to absorb the additional shares, Goldman added.

"We expect corporate equity issuance will total $600 billion in 2027," said Ben Snider, portfolio strategist at Goldman Sachs, in a note on 9 October, citing solid economic growth, higher stock prices, lower interest rates and continued investment linked to artificial intelligence.

Equity issuance has already reached about $431 billion this year, up 98% from a year earlier, and is on track to surpass the previous annual record of $540 billion set in 2021, according to the brokerage.

Artificial intelligence has been a key driver of issuance activity, with Goldman estimating that AI-related follow-on offerings totaled about $65 billion this year, accounting for 45% of total US volumes.

The brokerage also expects net public equity supply in 2027, including shares released following post-IPO lockup expirations, to record its largest increase since 2000.

Rising buybacks should help offset a significant portion of that increase, helping maintain a balance between equity supply and investor demand, Goldman added.

(Akriti Shah)

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