In 2025, the buyback scale of the US stock market is expected to exceed one trillion! The "long bull momentum" of the US stock market +1.

Zhitong App learned that Goldman Sachs, a major Wall Street investment bank, predicts that the stock buyback volume in the U.S. stock market will exceed $1 trillion for the first time in 2025. This is mainly driven by the strong profit growth trend of technology companies and the looser financial environment sought by the Federal Reserve this year compared to the previous two years. In a report dated March 6, the large Wall Street investment bank forecasts that the cumulative stock buyback volume of Pro UltrPro Shrt S&Pro 500 component companies will increase by 16% to $1.08 trillion in 2025, and is expected to grow by 13% to $925 billion in 2024. Since entering a "technical bull market" in 2023, the U.S. stock market continued to surge in 2024, and such a massive buyback volume will undoubtedly become an important catalyst for the long-term bull market of U.S. stocks.

Goldman Sachs stock strategists, led by Cormac Conners and David Kostin, wrote in the report, "The trend of corporate profit growth is the most important factor driving the stock buyback volume at the index level." The Goldman Sachs strategists expect a significant proportion of buybacks from large-cap stocks.

Social media giant Meta Platforms and its subsidiary Instagram's parent company, Meta Platforms, can be described as the "2024 U.S. stock buyback team" leaders. Meta previously announced strong fourth-quarter performance, with profits doubling and providing better-than-expected first-quarter revenue growth guidance. In addition, the company also announced plans to repurchase $500 billion in stock and pay quarterly dividends for the first time. Cloud software giant Salesforce (CRM.US) will distribute a first-quarter dividend of 40 cents per share to shareholders on April 11; Salesforce has also increased its stock buyback plan by $100 billion, bringing the total to $300 billion.

Generally, companies tend to choose to buy back stocks when they are confident in the future profit scale and believe that the stock price is undervalued by the stock market as a whole. So far this year, the benchmark stock index, Pro UltrPro Shrt S&Pro 500, has risen by over 8% and has repeatedly hit new highs, continuously breaking historical records. This is mainly driven by the investment frenzy around artificial intelligence in the market and the strong expectations for a rate cut by the Federal Reserve this year. As of Thursday's close, the Pro UltrPro Shrt S&Pro 500 closed at 5157 points.

Under the boost of repurchase, the Pro UltrPro Shrt S&Pro 500 shows no sign of stopping its rise! Barclays predicts it could reach as high as 6050 points.

What's more, some major commercial banks on Wall Street believe that there is even greater room for the index to rise. Coupled with Goldman Sachs' expectation of continued expansion in stock repurchase scale between 2024 and 2025, the outlook for Pro UltrPro Shrt S&Pro 500 is at least very optimistic by 2024.

Strategists at Deutsche Bank wrote in a recent report that higher profit margins may allow listed companies to engage in repurchases after key expenditures such as capital expenditures and debt repayment. "If corporate profits continue to be strong, the scale of repurchases will continue to increase and become an important driver of the stock market." Deutsche Bank's latest forecast is more optimistic than Goldman Sachs, with Deutsche Bank expecting the total amount of stock repurchases by US companies to increase to $1 trillion in 2024.

Goldman Sachs strategists point out that the rapid growth trend in overall revenue and profit margins of US technology companies is expected to provide funding for artificial intelligence investments in the coming years, without hindering shareholders from enjoying returns such as dividend payments and stock repurchase scale.

Data compiled by research firm Factset shows that Wall Street analysts generally expect the overall earnings per share of Pro UltrPro Shrt S&Pro 500 component companies to grow by about 11% in 2024, with overall revenue expected to grow by 5%. Overall, looking ahead to 2024, analysts expect Pro UltrPro Shrt S&Pro 500 earnings per share to reach $243.8, and further increase to $276 in 2025.

Goldman Sachs strategists also added that uncertainty at the US election level may lead US companies to postpone large-scale repurchases until 2025.

Star strategist Savita Subramanian from Bank of America expects the Pro UltrPro Shrt S&Pro 500 to reach 5400 points by the end of the year, compared to her previous target of 5000 points. This strategist stated that various technical indicators are flashing bullish signals, indicating that future profit growth will be stronger, and profit margin elasticity is "surprisingly" robust. The enthusiasm brought by artificial intelligence and the resilience of the U.S. economy have caught Wall Street forecasters by surprise, prompting strategists to scramble to keep up with the stock market rebound that has exceeded their expectations. In recent weeks, Piper Sandler, UBS, and Barclays have all raised their outlook for the Pro UltrPro Shrt S&Pro 500. Goldman Sachs Group and UBS Group have raised their expectations for U.S. economic growth twice since December last year, following the Federal Reserve's shift to a dovish policy.

Piper Sandler strategist Michael Kantrowitz, known as the most bearish strategist on the U.S. stock market in 2023 on Wall Street, recently raised his forecast for the Pro UltrPro Shrt S&Pro 500 to 5250 points. This expectation slightly exceeds the predictions of some bullish Wall Street peers such as Oppenheimer Asset Management's Chief Investment Strategist John Stoltzfus and Fundstrat Global Advisors' Head of Research Thomas Lee - both of whom expect the Pro UltrPro Shrt S&Pro 500 to reach 5,200 points by the end of the year.

Barclays Bank is arguably the most optimistic investment institution on Wall Street for the future of U.S. stocks. The institution has significantly raised its year-end target for the Pro UltrPro Shrt S&Pro 500 from 4800 points to 5300 points, mainly due to expectations that U.S. stocks will continue to benefit from the robust profit data of large tech companies and the outstanding performance of the U.S. economy beyond market expectations. Barclays also pointed out in its report that if the profit data of large tech companies continues to outperform expectations, the institution believes that the Pro UltrPro Shrt S&Pro 500 could potentially reach 6050 points by the end of this year.