Broadly speaking, U.S. companies remain devoted buyers of their own shares. New data from S&P Dow Jones Indices confirms that 2024 buybacks among members of the S&P 500 surged 18.5% on a year-over-year basis. That included a 7.4% jump in the fourth quarter. Count the Invesco QQQ Trust (QQQ ) and the Invesco NASDAQ 100 ETF (QQQM ) among ETFs highly levered to the theme of rising share repurchases. Importantly, that trend is showing signs of extending into the current quarter.
“For 2025, Q1 buybacks appear to have increased so far as stock prices have pulled back, with companies’ stocking-up on issues needed for employee options and ahead of the current uncertainty over economic and political policies. The net change should be a greater positive impact on Q1 2025 EPS,” noted Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
For Buybacks, QQQ Matters
Experienced investors know that at the sector level, share repurchase trends aren’t linear. That means companies in some sectors are apt to be more devoted buyers of their stocks than those in other groups. On that note, QQQ and QQQM are relevant because technology — those ETFs’ largest sector weight — has long been a prime buyback destination.
“Information technology maintained its lead in buybacks, even as its expenditure’s ticked down 0.4%, as it represented 26.2% of all buybacks for the quarter. Q4 2024 expenditures declined to $63.7 billion, compared to Q3 2024’s $64.0 billion, and were up 13.3% from Q4 2023’s $56.3 billion expenditure. For 2024, the sector increased its expenditure 28.0% to $253.4 billion representing 26.9% of all S&P 500 buybacks, compared to 2023’s $197.9 billion which represented 24.9% of all buybacks,” added S&P.
In fourth quarter, Apple AAPL was the top buyer of its own stock in the S&P 500. Semiconductor giant Nvidia NVDA placed third. Those two stocks combine for nearly 17% of the QQQ/QQQM portfolios. Google parent Alphabet GOOGL, which accounts for more than 5% of the ETFs’ rosters, was the second-largest buyer of its own shares in the fourth quarter. That stock resides in the communication services sector.
Looking at a broader list of big buyers of their own shares in the fourth quarter, nine of the top 20 names, including Apple, Alphabet, and Nvidia, are held by QQQ and QQQM. Further underscoring the credibility of the Invesco ETFs as havens of share repurchase activity, those nine stocks combine for approximately 40% of the funds’ weights.
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