What is a stock buyback?

How a buyback works

1. The board approves a program. It sets a ceiling, like “up to $10 billion,” usually with no deadline. Big companies announce it in a press release and an 8-K filing. See the latest ones.
2. The company buys shares over months or years. Most buy through a broker on the open market. Some buy a big block at once from a bank (an accelerated share repurchase), or offer to buy from shareholders at a set price (a tender offer).
3. The shares are retired or held as treasury stock. Either way they stop counting as outstanding.
4. Every remaining share is a bigger slice. Earnings per share rise even if total profit doesn’t, because the same profit is split among fewer shares.

A real example: Apple

Apple is the biggest buyer of its own stock. From fiscal 2014 to fiscal 2025 it spent $793B on buybacks. Its diluted share count fell from 24.49B to 15.00B, a drop of 39%. Someone who held the same shares the whole time now owns about 63% more of the company without buying anything.

From Apple’s 10-K filings, adjusted for its stock splits. Apple’s full record →

Why companies buy back stock

• To return spare cash without promising a dividend they’d be expected to keep paying.
• To lift earnings per share, which many executives’ bonuses are tied to.
• To signal confidence: management is saying it thinks the stock is worth more than the price.
• To offset stock given to employees, so the share count doesn’t creep up.

The biggest buyers right now: Apple ($82.2B), Nvidia ($55.3B), Salesforce ($35.1B), JPMorgan Chase ($31.7B), Bank of America ($24.9B).

Buybacks vs. dividends

Tax treatment depends on where you live and the account you hold shares in.

The catch: stock pay

Companies also hand out new shares to employees as pay. A buyback that only soaks up those new shares doesn’t shrink anything. S&P 500 companies paid $271B in stock compensation over the same twelve months. Subtract it from buybacks and the picture changes: 308 companies bought back more than they paid out in stock, and 55 paid out more than they bought back.

When buybacks stop

Alphabet is the clearest case right now. It spent $62.2B on buybacks in fiscal 2024 and $45.7B in 2025. Since Q1 2026 its filings report none. Over the last twelve months it raised $49.6B by issuing new stock. When a company that bought back stock for years stops, it usually needs the cash for something else. Others that have stopped: Meta Platforms, Honeywell Technologies, Southwest Airlines, Lockheed Martin.

Alphabet’s full record →

Are buybacks good or bad?

It depends on how they’re done. A buyback tends to work for shareholders when:

• the company pays a fair price for its stock, not a peak one;
• it’s paid for with spare cash rather than new debt;
• it actually shrinks the share count, after stock pay.

Critics argue buybacks reward short-term stock moves, flatter earnings per share, and can crowd out investment in the business. Supporters say returning cash a company can’t use well is better than wasting it. Both can be true of different companies, which is why the numbers per company matter more than the total.

The buyback tax

Since 2023, US public companies pay a 1% federal excise tax on buybacks, created by the Inflation Reduction Act. It applies to the value of shares repurchased minus new shares issued in the same year, and companies that repurchase $1 million or less a year are exempt. Companies report it on IRS Form 7208; the IRS’s final rules took effect on November 24, 2025.

A Senate bill introduced on June 16, 2026 (S. 4796, the Stock Buyback Accountability Act) would raise the rate to 4%. As of Oct 23, 2026 it had not passed.

Words you’ll see

Authorization

The maximum the board allows the company to spend on buybacks. It’s permission, not a promise to buy.

Open-market repurchase

Buying shares on the stock exchange through a broker, a little at a time. The most common kind.

Accelerated share repurchase (ASR)

The company pays a bank up front and gets most of the shares immediately; the bank buys them in the market over the following months.

Tender offer

The company offers to buy shares directly from shareholders at a set price, usually above the market price.

Treasury stock

Repurchased shares the company keeps instead of cancelling. They don’t vote or receive dividends.

Buyback yield

Buybacks over the last twelve months divided by the company’s market value. The buyback version of dividend yield.

Net buybacks

Buybacks minus the stock a company issues, often to employees. The number that tells you whether your slice is really growing.

Track buybacks yourself

Every S&P 500 company has a page here with its buybacks by quarter, its share count, and links to the filings: see all 500, or start with Apple, Nvidia, Salesforce. New buyback programs show up on the authorizations page within hours of the filing. How each number is calculated is on the methodology page.

This guide explains how buybacks work. It is not investment advice.