Buying High: Stock Buybacks Soar

When in doubt, just buy back stock.  

That’s what a majority of big-company finance executives and CEOs have decided in 2025. Amid near-record stock-market highs and economic uncertainty, US firms have announced nearly $1 trillion worth of stock buybacks so far in 2025, the best start to a year on record, according to data going back to 1982. The all-time high for purchases in a year is $1.1 trillion, set in 2022. It’s a milestone that, if conditions hold, firms likely will break. 

On the surface, at least, the buybacks look like an expensive move, with the stock market at or near record highs. But experts say alternatives, such as letting a company’s cash sit unused, can backfire by attracting activist investors. Meanwhile, turning to mergers means facing the same issue: high stock valuations. By buying back stock, company leaders can increase the firm’s earnings per share, making its outstanding shares more valuable.

“In today’s market, it’s one of the most direct levers to support earnings per share and keep valuations steady when predictability is what investors are rewarding,” says Beau Lambert, a senior client partner in Korn Ferry’s Financial Officer Center of Expertise. And when a company increases buybacks, that often puts pressure on its rivals to do the same, he says. 

While big tech and financial firms are the biggest purchasers of their own stock—with 20 such companies accounting for nearly half of this year’s announced repurchases—they’re certainly not alone. Indeed, 384 companies reported new buybacks of at least $5 million in the first three months of the year. Part of what’s motivating them, experts say, are their own growth prospects in today’s extremely uncertain environment. Organic growth is hard to find, and major uncertainty persists around trade policies, inflation, and AI; in this climate, it can be difficult not only to determine the cost of producing new goods (or where to produce them), but also to forecast demand. While leaders could conceivably spend the cash on acquisitions, the valuations of other companies are sky-high right now. “Buybacks are generally being evaluated against other, often really expensive M&A alternatives,” says Jeff Constable, co-leader of Korn Ferry’s Global Financial Officers practice.  

Companies often will increase their stock buybacks when they’re flush with cash—typically when the market in general, and their own stock in particular, are at historically high valuations. Indeed, over the last seven years (with the exception of 2018), the value of share repurchases has moved in near-direct correlation with that of the broader stock market. “It often looks like they are buying high rather than acting as value investors,” says Alan Guarino, vice chairman of Korn Ferry’s Board and CEO Services practice. 

But not spending the cash on stock has its own drawbacks. If company leaders opt to let the cash sit (and earn minimal returns), they can be accused of having a “lazy” balance sheet, which in turn can attract activist investors, Guarino says. And while companies could return excess cash to shareholders by substantially increasing higher dividend payouts, many have been loath to do so. Dividends aren’t as tax efficient as buybacks. Plus, even if firms can afford higher dividend payouts now, an economic downturn could make it difficult for them to honor those commitments later—and investors like few things less than a company cutting its dividend. 

Lambert says that the best finance leaders are positioning their share repurchases as part of a balanced approach to capital allocation that also includes organic reinvestment, M&A, and balance-sheet management. “It is when buybacks become the whole story that it raises questions,” he says. 

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