On July 30, 2026, good news came from the US stock market: according to the latest data, total share buybacks by US listed companies in the first half of 2026 exceeded $800 billion, hitting a record high for the same period. This figure is about 15% higher than the same period in 2025 and still accelerating. The buyback boom not only boosted investor confidence but also provided new evidence for "why buy US stocks" - the world's best companies are proving their value through concrete actions.

Why did buyback scale surge?

Share buyback refers to a listed company using its own funds to repurchase its own shares in the open market. After buybacks, the total share count decreases, earnings per share (EPS) rises, and stock prices typically find support. Behind the buyback surge in H1 2026, there are three main driving forces:

  • Solid corporate earnings: Despite inflation and interest rate pressures, overall US corporate earnings remain resilient. Among S&P 500 constituents, over 70% posted earnings beats, providing "ammunition" for buybacks.
  • Enhanced management confidence: In the rebound wave led by tech stocks, many companies believe their current share prices are undervalued, making buybacks a preferred tool to convey confidence. For example, giants like Apple and Google parent Alphabet announced massive buyback plans in their earnings reports.
  • Favorable tax environment: The current US tax law imposes higher taxes on capital gains and dividends, while buybacks, by boosting stock prices, help shareholders defer taxes, making them highly favored.

How do buybacks affect stock prices?

Based on historical data, companies that consistently buy back shares often outperform the broader market. For example, the S&P 500 Buyback Index, which tracks the 100 companies with the largest buyback programs, delivered an annualized return of over 12% in the past decade, exceeding the S&P 500 benchmark. The supporting effect of buybacks on stock prices is reflected in three aspects:

  • Direct demand: The company enters the market as a buyer, increasing buying pressure and boosting stock prices in the short term.
  • Signal effect: Management "putting their own money" is often interpreted as the stock being undervalued, attracting follow-up capital.
  • Financial metric optimization: After share count reduction, key indicators such as EPS and return on equity (ROE) improve, increasing valuation attractiveness.

But not all buybacks are worth pursuing. Some companies may take on debt to buy back shares to dress up financial statements. If earnings decline, they could face trouble. Therefore, investors need to distinguish the motivation and financial health behind buybacks.

How to use buyback signals to select stocks?

For ordinary investors, you can focus on the following screening criteria:

  • Buyback consistency: Prioritize companies that have been buying back shares for more than three consecutive years, such as blue chips like Apple, Microsoft, and Exxon Mobil.
  • Buyback scale as a percentage of market cap: The higher the buyback amount relative to market cap, the stronger the signal. Generally, above 2% is considered positive.
  • Financial condition: Ensure the company has ample cash flow and a reasonable debt ratio. Avoid highly leveraged firms.
  • Fundamental alignment: Combine indicators like revenue growth and gross margin to prevent buybacks from masking business decline.

Take tech giant Apple as an example. In H1 2026, it bought back about $90 billion, with free cash flow exceeding $100 billion. Its buybacks and dividends go hand in hand, making it a model of shareholder returns. Similarly, energy giant Chevron also increased buybacks due to high oil prices, resulting in steady stock price performance.

Risks and opportunities amid the buyback boom

Of course, buybacks are not a panacea. When the overall market valuation is high, massive buybacks may be just "financial engineering" rather than value creation. Additionally, if recession expectations rise, companies may cut buybacks to preserve cash. In the second half of 2026, as the Fed's policy path remains unclear, buyback growth may slow.

But overall, the buyback boom is an important manifestation of the mature US stock market mechanism. For international investors, buying US stocks not only gains growth dividends from world-class companies but also shares excess returns from management's active shareholder return policies. This is one of the core reasons for "why buy US stocks."

Nanyang Stock News believes that amid the current buyback wave, opportunities stand out in the tech and energy sectors. Investors can position through ETFs (such as PKW, SYLD) or selected stocks while staying alert to the macro environment. Perpetual US stock buybacks are like a ship of value discovery, helping investors navigate through cycles.