Market Insights: 💸 Why Big Tech Is Buying Itself Back

💸 The Return of Share Buybacks in Tech

Some of the biggest names in tech are restarting their buyback programs. 

The top twenty S&P 500 companies now account for more than half of all share repurchases in Q2 2025, marking one of the most concentrated waves of buyback activity in years.

This resurgence reflects a shift from splashy capital spending toward rewarding shareholders directly, even as valuations remain somewhat elevated and regulatory scrutiny builds.

By the end of this piece, you’ll see:

• What’s really driving this new buyback cycle, 
• Which companies are using it to create genuine value, and 
• When repurchases are smart capital allocation or financial sleight of hand.

🎧 Would you prefer to listen to these insights? You can find the audio version on our Spotify, Apple Podcasts or our YouTube! (Released by 5pm Monday AEST).

This week's Market Insights is an 8 minute read! Full article here

Quote of the week

“Every small bit helps if repurchases are made at value-accretive prices. Just as surely, when a company overpays for repurchases, the continuing shareholders lose”

Warren Buffett

What Happened In The Markets This Week?

Here’s a quick summary of what’s been going on:

🏛️ US government opens back up, but deep political divisions remain (Reuters)

• After 43 days, the US government is back in action, but only until January 30, so the clock’s already ticking toward a potential encore shutdown.
• Economic data blackouts and delayed federal spending dented Q4 GDP by 1.5 points, with $14 billion of it gone for good.
• We should expect more volatility as political infighting remains unresolved, health subsidy votes are unguaranteed, and Trump’s civil service cuts could still re-emerge.
• Consumer confidence took a hit just as holiday spending ramps up. Some retail and travel names may experience soft earnings revisions as a result.
• The next shutdown showdown could reignite market stress, especially with no debt ceiling debate in sight.

💰 SoftBank sells its entire stake in Nvidia for $5.83 billion (CNBC)

• SoftBank just cashed out its entire Nvidia stake for $5.83B. Not because it’s cooling on AI, but to reload for a $22.5B plunge into OpenAI and other AI bets.

• The move is part of a bigger capital shift: it also trimmed T-Mobile holdings and tapped margin loans on Arm. SoftBank needs over $30B for AI deals this quarter alone, more than it spent in the last two years combined.

• Despite selling Nvidia, it's not turning away from the chipmaker, it’s doubling down on AI plays that still rely on Nvidia tech.
• This news is not necessarily bearish for Nvidia, it’s just SoftBank redeploying the capital to OpenAI and AI infrastructure. Keep an eye out for any ripple effects in chip, robotics, and AI startup valuations.
  

To see our take on these market stories below, simply check out the full article!

• 💸 Anthropic Is on Track to Turn a Profit Much Faster Than OpenAI (WSJ)

• ⚠️ Michael Burry has some concerns about AI accounting (Sherwood)

• 🏛️ The shutdown put jobs and inflation data on hold (CNBC)

• 🏦 Howard Marks highlights credit ‘carelessness’ but says issues are not systemic (CNBC)

Now let’s dive into the main piece!

📅 Historical Context on Buybacks

Believe it or not, until the SEC adopted Rule 10b-18 in 1982, share buybacks were actually considered illegal! 

They were considered a form of market manipulation and were open to liability because they could be used to unfairly inflate a stock price. But that ruling created a “safe harbor” that permitted companies to conduct buybacks as long as they followed specific rules and conditions.

Since then, they have been a popular and tax-efficient method to return capital to shareholders. 

As a quick reminder, buybacks matter because all else being equal, they:

• Shrink the share count, 
• Lift earnings per share, and 
• Support valuations. 

They also send a clear signal that management believes the stock is undervalued and that future cash flows are strong. 

You can see in the chart below that, since 1988, momentum in share buybacks has not always been steady. 

Source: S&P Global

During the pandemic years, repurchases slowed amidst the uncertainty, only to surge again a year later. In 2022, they reached a new record. But that changed in 2023 when buybacks fell 13.8% year over year as valuations soared. 

Instead of buying back their stock, companies had turned towards capital spending in areas like AI, where returns take time to materialize. 

Last year, though, there was a shift....

Tech giants are buying back their shares at record levels again.

But not all repurchases are created equal.

Some signal real confidence in fundamentals,

while others may just inflate earnings on paper.

So our full piece covers:

💰 What’s driving the 2025 rebound in buybacks

across tech and communication services.

📊 Which companies, like Nvidia, Apple, and Alphabet,

are turning excess cash into shareholder value.

⚠️ When buybacks backfire, from overvalued repurchases

to cosmetic programs that mask dilution.

💡 How investors can spot genuine value-creating buybacks using free cash flow, debt levels, and fair value screeners.

💬 Join the discussion by leaving a comment!

Do you prefer buybacks or dividends?

Key Events During the Next Week

Monday

• 🇯🇵 Quarterly GDP Growth Prel 
  • ⬇️ Forecast: 0.1% Previous: 0.5%
  • ▶️ Why it matters: Slower growth keeps the BoJ cautious and can weigh on JPY and Japanese yields.

Tuesday

• 🇦🇺 RBA Minutes
  • ▶️ Why it matters: The tone on inflation and housing guides the path for cuts and can move AUD and front-end yields.

Wednesday

• 🇯🇵 Balance of Trade
  • ⬆️Forecast: ¥-150B Previous: ¥-234B
  • ▶️ Why it matters: A narrower deficit hints at firmer exports/lower imports, supportive for JPY and exporters.

Thursday

• 🇬🇧 Inflation Rate YoY
  • ⬇️ Forecast: 3.7% Previous: 3.8%
  • ▶️ Why it matters: Softer inflation keeps BoE cuts in play and tends to support government bonds over GBP.

Friday

• 🇬🇧 Retail Sales MoM
  • ⬇️ Forecast: -0.2% Previous: 0.5%
  • ▶️ Why it matters: Weaker spending flags slower growth and can pressure GBP and UK retailers.

Some more big names are reporting this week:

• Nvidia
• Walmart
• Home Depot
• PDD Holdings
• Intuit
• TJX
• Palo Alto Networks

Until next week, invest well.

Simply Wall St