Breakingviews: Stock buybacks present solid trade-war tradeoff

Buying the dip is a good idea for at least one set of investors: CFOs. Chipmaker Broadcom unveiled a $10 billion share buyback plan, in a move that helps buffer valuations suffering even after Wednesday’s tariffs-rollback rally. Unlike many stock repurchases that tend to occur when prices are rising, doing so now would be a shrewd use of corporate capital to buck market trends.

Broadcom’s program sends a signal that boss Hock Tan has unwavering confidence in a strategy to dominate the customized artificial intelligence semiconductor market for customers such as Google and Meta Platforms. He has done this before, in 2021 and 2023, while simultaneously financing the $61 billion VMware acquisition. The results speak for themselves: after falling 37% to start 2025, the company’s stock price has jumped 14% since Monday’s announcement. It is also up 550% over five years.

The math is sometimes simple. When shares trade below their intrinsic value, buybacks deliver quick returns. Reducing the number outstanding lifts per-share metrics, offering sellers immediate cash for a bigger piece of future profits. When funding big projects or M&A carries more risk, as it does now amid erratic tariff policy, acquiring discounted shares is the better option. Even Warren Buffett endorses the idea, saying there’s no better investment than your own business at a bargain.

Too many executives, however, are less judicious than the Oracle of Omaha with their buybacks. Photoshop developer Adobe, for example, authorized a $25 billion plan last March after its acquisition of rival Figma collapsed. The shares, at $550 apiece then, now trade around $360. United Airlines, Lululemon Athletica and Coty are among the others with bad timing in recent years.

S&P 500 Index members spent a record $940 billion on stock repurchases last year, shattering the $800 billion mark from 2023, according to S&P Dow Jones Indices. Activity is up slightly in 2025; first quarter earnings will offer more clarity. Some CEOs may be short on cash while others will be inclined to hoard it with chances of recession growing. For the ones ready to reassure shareholders and capitalize on valuation markdowns, there are plenty of opportunities to back themselves.