Valuation – 12-Month Forward P/E Ranges (MSCI Regions) U.S. and global equity markets are trading at historically high valuation levels. Sustaining these valuations will require continued—and ideally accelerating—earnings growth across sectors and regions. Image: Goldman Sachs Global Investment Research
S&P 500 Sector P/E Valuations Relative to History Valuation metrics indicate that most S&P 500 sectors are overvalued compared to historical standards. Image: Goldman Sachs Global Investment Research
U.S. Equity Index P/E Valuations vs. History The S&P 500’s forward P/E of about 22x suggests optimism; however, it also points to greater risk, since the market is increasingly sensitive to any earnings shortfalls or macroeconomic challenges ahead. Image: Goldman Sachs Global Investment Research
Valuation – S&P 500 Forward P/E Goldman Sachs projects the S&P 500 forward P/E ratio to remain near 22 times over the next year, up from their previous estimate of 20.4 times, driven by anticipated earlier and deeper Fed rate cuts and declining bond yields. Image: Goldman Sachs Global Investment Research
Valuation – Magnificent Seven Forward P/E The Magnificent 7 stocks continue to trade at a premium compared to the rest of the S&P 500. However, this premium has narrowed in 2025. Image: Goldman Sachs Global Investment Research
Global Equity Valuations The market environment favors global ex-U.S., small-cap, and value stocks for their cheap valuations and growth potential, while U.S., large-cap, and growth stocks face valuation headwinds and higher downside risk. Image: Topdown Charts
Valuation – S&P 500 Index Forward P/E Ratio vs. MSCI World Ex-U.S. Forward P/E Ratio U.S. equities currently trade at roughly a 50% premium over international stocks, fueled by stronger earnings growth, greater profitability, and investors’ willingness to pay extra for these advantages. Image: Bloomberg
Valuation – S&P 500 Forward Price-to-Earnings The S&P 500 is trading at 22 times expected earnings over the next year, 35% above its 20-year average. These elevated valuations are partly justified by expectations of strong forward earnings growth. Image: Bloomberg
S&P 500 Valuation Multiples Overvaluation in the S&P 500, especially among tech and AI stocks, is a legitimate concern in light of downward revisions to earnings estimates for 2025 and the high degree of index concentration. Image: Real Investment Advice
Developed Market Valuations While the macroeconomic outlook has weakened, the U.S. stock market’s forward P/E ratio has moved back toward pre-Liberation Day levels. Image: TS Lombard
Forward 10-Year Real Returns and CAPE Valuations While high CAPE ratios can persist in markets for years, history suggests these elevated valuations often precede eras of subdued stock returns. Image: Real Investment Advice