A sharp increase in U.S. equity issuance is unlikely to overwhelm the stock market in 2026 because companies are simultaneously buying back shares at an even faster pace, according to Goldman Sachs. The bank forecasts approximately $1.4 trillion of corporate repurchases this year, enough to absorb rising primary issuance and additional stock entering the market following IPO lockup expirations.
Follow-on offerings reach strongest pace since 2021
U.S. companies raised $105 billion through follow-on equity offerings during the first seven months of the year.
Total second-quarter issuance across IPOs, follow-ons, convertible securities and SPACs reached a record $252 billion.
That exceeded the previous quarterly record of $234 billion set in early 2021.
Goldman nevertheless sees the increase as normalisation rather than excessive capital raising.
“Follow-on equity issuance is increasing but represents a return to normal rather than a boom,” strategists led by Ben Snider said.
The number of deals remains below historical averages, as does issuance when measured against total U.S. equity-market capitalisation.
AI accounts for 40% of follow-on issuance
Artificial intelligence is playing a central role in the increase.
Around 40% of U.S. follow-on equity issuance this year has been connected to AI-related financing requirements.
Goldman expects this trend “will continue to increase going forward.”
The enormous cost of building data centres, acquiring computing hardware and developing related infrastructure means AI companies increasingly need external financing in addition to internally generated cash.
Equity markets offer one route to raising that capital without relying entirely on debt.
Hyperscalers face $1.1 trillion capex bill
Consensus forecasts suggest hyperscaler capital expenditure could reach $1.1 trillion during 2027.
At that level, spending would exceed operating cash flow by approximately $150 billion.
Free cash flow is expected to turn positive again in 2028, but there is considerable uncertainty surrounding the forecasts.
“While recent earnings reports signal upside risk to estimates for hyperscaler revenues, many investors believe capex will register well above consensus forecasts,” Goldman said.
A larger-than-expected capex cycle could increase the need for both debt and equity financing.
AI debt issuance could reach $400 billion
Debt markets are expected to absorb most of the financing requirement.
Goldman’s credit team forecasts that hyperscalers will fund approximately 35% of their 2027 capital expenditure through borrowing.
That implies around $400 billion of debt issuance globally.
Equity nevertheless “should also continue to play a role.”
For some businesses, issuing shares could provide capital for long-term AI investment while preserving credit quality and preventing excessive reliance on already heavily utilised debt markets.
Investors show no signs of issuance fatigue
Rising equity supply has not yet created obvious pressure on market conditions.
Companies typically issue more shares when stock markets are performing strongly and their valuations command a premium to the wider market.
Goldman said that historical pattern has remained intact this year.
More importantly, investors appear capable of absorbing the increased issuance.
Offering discounts and subsequent stock performance show “any abnormal sign of indigestion,” according to the bank.
Buyback authorisations approach $1 trillion
While companies are issuing more shares, they are simultaneously announcing enormous repurchase programmes.
S&P 500 buybacks increased approximately 11% year over year during the second quarter.
New repurchase authorisations have already approached a record $1 trillion year-to-date.
These programmes create a substantial counterweight to the new supply entering equity markets.
As companies retire shares through buybacks, they reduce publicly available equity and create direct demand for their own stocks.
$1.4 trillion buyback wave outweighs new shares
Goldman expects corporate America to repurchase approximately $1.4 trillion of stock this year.
By comparison, primary equity issuance is projected at roughly $700 billion.
Additional supply could emerge as lockup periods expire for recently listed companies, allowing insiders and early investors to sell shares.
Even accounting for that potential pressure, Goldman believes corporate demand should outweigh supply.
The supply-demand balance is becoming somewhat less supportive than previously as AI financing requirements drive issuance higher.
However, with estimated buybacks running at approximately twice the level of primary equity issuance, corporate repurchases should remain a major source of support for U.S. equities throughout 2026.
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