MW The S&P 500 is at its most expensive by this measure. These stocks have bucked the trend.
By Philip van Doorn
The U.S. benchmark just hit its highest price/trailing sales ratio ever
The broad U.S. stock market is trading at a historically high level to companies' revenue. But there are plenty of companies whose stocks haven't followed suit.
In a bull market, it is not unusual to see a cycle of record highs for stock indexes. But what may be more important to investors is how expensive stocks are relative to revenue or earnings. On a price-to-sales basis, the broad U.S. stock market has trended upward and is at its most expensive. But some stocks have bucked the trend, as shown below.
A warning
If you have been worried that the stock market has become overheated, check out this post on X from Charlie Bilello on Aug. 10.
That warning included a long-term chart showing the ratio of the S&P 500's price to trailing sales. These are prices to rolling 12-month revenue figures, weighted by market capitalization.
Through Tuesday's close, the large-cap U.S. benchmark's price/trailing sales ratio had climbed even higher.
Tuesday's closing price/trailing sales ratio of 3.19 for the S&P 500 SPX was very high relative to the average level of 1.88 going back to the end of 1999. But that average reflected the bursting of the dot-com bubble in the early 2000s, as well as the brutal decline from late 2007 through early March 2009 during the financial crisis.
We actually screened the more expensive Nasdaq-100 Index NDX for a tech-oriented screen of stocks that have resisted the high price/sales trend. But let's first dig a bit further into the S&P 500.
The most expensive sectors
If we look back only 10 years, the current valuation is well above average levels for the index and its sectors. Here is a valuation comparison for the 11 sectors of the S&P 500, sorted by price/trailing sales, with the full index at the bottom:
Sector or index Price/ trailing sales 10-year average price/ trailing sales Current valuation to 10-year average
Information Technology 9.76 5.22 187%
Real Estate 6.50 7.19 90%
Communication Services 4.42 3.27 135%
Consumer Discretionary 2.92 2.27 129%
Utilities 2.87 2.35 122%
Industrials 2.85 2.06 138%
Financials 2.80 2.59 108%
Materials 2.25 1.93 117%
Consumer Staples 1.49 1.34 111%
Healthcare 1.45 1.72 84%
Energy 1.31 1.27 103%
S&P 500 3.19 2.39 133%
Source: FactSet
The full S&P 500's price/trailing sales ratio is 33% higher than its 10-year average. The most expensive sector is information technology with a price/trailing sales ratio of 9.76, which is 87% higher than its 10-year average level.
Investors need to keep in mind that the S&P 500 is weighted by market capitalization. This means that three companies - Nvidia Corp. (NVDA), Microsoft Corp. $(MSFT)$ and Apple Inc. $(AAPL)$ - make up 21.2% of the portfolio of the SPDR S&P 500 ETF Trust SPY. And they have a 26.6% weighting in the Invesco QQQ ETF QQQ, which tracks the Nasdaq-100.
You might be interested in seeing how price/trailing sales ratios stack up for the "Magnificent Seven" group of stocks. Here they are, sorted by how high the current valuations are to 10-year averages:
Company Ticker Price/ trailing sales 10-year average price/ trailing sales Current valuation to 10-year average Meta Platforms Inc. META 10.21 7.36 139% Apple Inc. AAPL 8.30 7.28 114% Microsoft Corp. MSFT 13.18 11.59 114% Amazon.com Inc. AMZN 3.56 3.16 113% Alphabet Inc. Class A GOOGL 6.45 5.97 108% Nvidia Corp. NVDA 25.19 23.60 107% Tesla Inc. TSLA 11.24 11.64 97%
Aside from Amazon (AMZN), which trades for 3.6 times trailing sales, all of these stocks trade at multiples of the S&P 500's weighted ratio of 3.2.
Tesla $(TSLA)$ is the only member of the Magnificent Seven trading below its 10-year average valuation on this basis.
Getting back to sector valuations, note that among the Magnificent Seven, only Nvidia, Microsoft and Apple are in the S&P information-technology sector. Amazon and Tesla are in the consumer-discretionary sector, while Meta (META) and Alphabet $(GOOGL)$ $(GOOG)$ are in the communications-services sector.
Stock screen - low valuations and high expectations for sales growth through 2027
The stock market's long rally has been led by Big Tech. An interesting way to screen for stocks bucking the trend of high price/trailing sales valuations is to look at the Nasdaq-100 index - the one tracked by QQQ. This index is made up of the 100 largest nonfinancial companies in the full Nasdaq Composite Index COMP. It is trading at a price/trailing sales ratio of 6.98, which is 47% higher than its 10-year average valuation of 4.76.
Among the Nasdaq-100, 54 stocks are trading below their average 10-year price/trailing sales valuations. To narrow the list further, here are the 20 projected to show the highest compound annual growth rates (CAGR) for sales over the next two years:
Company Ticker Two-year estimated sales CAGR through 2027 Price/ trailing sales 10-year average price/ trailing sales Current valuation to 10-year average MercadoLibre Inc. MELI 24.4% 4.67 8.34 56% CrowdStrike Holdings Inc. Class A CRWD 22.6% 23.66 28.08 84% Shopify Inc. SHOP 22.3% 17.37 20.55 85% ARM Holdings PLC ADR ARM 20.4% 33.03 35.16 94% Datadog Inc. Class A DDOG 20.3% 14.55 27.49 53% Zscaler Inc. ZS 20.2% 15.91 25.81 62% Tesla Inc. TSLA 19.6% 11.24 11.64 97% Atlassian Corp Class A TEAM 18.9% 8.15 20.2 40% Marvell Technology Inc. MRVL 18.7% 8.72 10.38 84% Trade Desk Inc. Class A TTD 16.8% 9.49 23.93 40% DexCom Inc. DXCM 15.0% 7.19 14.17 51% Intuitive Surgical Inc. ISRG 14.6% 18.54 18.67 99% PDD Holdings Inc. ADR PDD 14.6% 2.87 7.02 41% CoStar Group Inc. CSGP 13.1% 12.57 14.78 85% Workday Inc. Class A WDAY 13.1% 6.79 9.67 70%
MW The S&P 500 is at its most expensive by this measure. These stocks have bucked the trend.
By Philip van Doorn
The U.S. benchmark just hit its highest price/trailing sales ratio ever
The broad U.S. stock market is trading at a historically high level to companies' revenue. But there are plenty of companies whose stocks haven't followed suit.
In a bull market, it is not unusual to see a cycle of record highs for stock indexes. But what may be more important to investors is how expensive stocks are relative to revenue or earnings. On a price-to-sales basis, the broad U.S. stock market has trended upward and is at its most expensive. But some stocks have bucked the trend, as shown below.
A warning
If you have been worried that the stock market has become overheated, check out this post on X from Charlie Bilello on Aug. 10.
That warning included a long-term chart showing the ratio of the S&P 500's price to trailing sales. These are prices to rolling 12-month revenue figures, weighted by market capitalization.
Through Tuesday's close, the large-cap U.S. benchmark's price/trailing sales ratio had climbed even higher.
Tuesday's closing price/trailing sales ratio of 3.19 for the S&P 500 SPX was very high relative to the average level of 1.88 going back to the end of 1999. But that average reflected the bursting of the dot-com bubble in the early 2000s, as well as the brutal decline from late 2007 through early March 2009 during the financial crisis.
We actually screened the more expensive Nasdaq-100 Index NDX for a tech-oriented screen of stocks that have resisted the high price/sales trend. But let's first dig a bit further into the S&P 500.
The most expensive sectors
If we look back only 10 years, the current valuation is well above average levels for the index and its sectors. Here is a valuation comparison for the 11 sectors of the S&P 500, sorted by price/trailing sales, with the full index at the bottom:
Sector or index Price/ trailing sales 10-year average price/ trailing sales Current valuation to 10-year average
Information Technology 9.76 5.22 187%
Real Estate 6.50 7.19 90%
Communication Services 4.42 3.27 135%
Consumer Discretionary 2.92 2.27 129%
Utilities 2.87 2.35 122%
Industrials 2.85 2.06 138%
Financials 2.80 2.59 108%
Materials 2.25 1.93 117%
Consumer Staples 1.49 1.34 111%
Healthcare 1.45 1.72 84%
Energy 1.31 1.27 103%
S&P 500 3.19 2.39 133%
Source: FactSet
The full S&P 500's price/trailing sales ratio is 33% higher than its 10-year average. The most expensive sector is information technology with a price/trailing sales ratio of 9.76, which is 87% higher than its 10-year average level.
Investors need to keep in mind that the S&P 500 is weighted by market capitalization. This means that three companies - Nvidia Corp. (NVDA), Microsoft Corp. (MSFT) and Apple Inc. (AAPL) - make up 21.2% of the portfolio of the SPDR S&P 500 ETF Trust SPY. And they have a 26.6% weighting in the Invesco QQQ ETF QQQ, which tracks the Nasdaq-100.
You might be interested in seeing how price/trailing sales ratios stack up for the "Magnificent Seven" group of stocks. Here they are, sorted by how high the current valuations are to 10-year averages:
Company Ticker Price/ trailing sales 10-year average price/ trailing sales Current valuation to 10-year average Meta Platforms Inc. META 10.21 7.36 139% Apple Inc. AAPL 8.30 7.28 114% Microsoft Corp. MSFT 13.18 11.59 114% Amazon.com Inc. AMZN 3.56 3.16 113% Alphabet Inc. Class A GOOGL 6.45 5.97 108% Nvidia Corp. NVDA 25.19 23.60 107% Tesla Inc. TSLA 11.24 11.64 97%
Aside from Amazon (AMZN), which trades for 3.6 times trailing sales, all of these stocks trade at multiples of the S&P 500's weighted ratio of 3.2.
Tesla (TSLA) is the only member of the Magnificent Seven trading below its 10-year average valuation on this basis.
Getting back to sector valuations, note that among the Magnificent Seven, only Nvidia, Microsoft and Apple are in the S&P information-technology sector. Amazon and Tesla are in the consumer-discretionary sector, while Meta (META) and Alphabet (GOOGL) (GOOG) are in the communications-services sector.
Stock screen - low valuations and high expectations for sales growth through 2027
The stock market's long rally has been led by Big Tech. An interesting way to screen for stocks bucking the trend of high price/trailing sales valuations is to look at the Nasdaq-100 index - the one tracked by QQQ. This index is made up of the 100 largest nonfinancial companies in the full Nasdaq Composite Index COMP. It is trading at a price/trailing sales ratio of 6.98, which is 47% higher than its 10-year average valuation of 4.76.
Among the Nasdaq-100, 54 stocks are trading below their average 10-year price/trailing sales valuations. To narrow the list further, here are the 20 projected to show the highest compound annual growth rates (CAGR) for sales over the next two years:
Company Ticker Two-year estimated sales CAGR through 2027 Price/ trailing sales 10-year average price/ trailing sales Current valuation to 10-year average MercadoLibre Inc. MELI 24.4% 4.67 8.34 56% CrowdStrike Holdings Inc. Class A CRWD 22.6% 23.66 28.08 84% Shopify Inc. SHOP 22.3% 17.37 20.55 85% ARM Holdings PLC ADR ARM 20.4% 33.03 35.16 94% Datadog Inc. Class A DDOG 20.3% 14.55 27.49 53% Zscaler Inc. ZS 20.2% 15.91 25.81 62% Tesla Inc. TSLA 19.6% 11.24 11.64 97% Atlassian Corp Class A TEAM 18.9% 8.15 20.2 40% Marvell Technology Inc. MRVL 18.7% 8.72 10.38 84% Trade Desk Inc. Class A TTD 16.8% 9.49 23.93 40% DexCom Inc. DXCM 15.0% 7.19 14.17 51% Intuitive Surgical Inc. ISRG 14.6% 18.54 18.67 99% PDD Holdings Inc. ADR PDD 14.6% 2.87 7.02 41% CoStar Group Inc. CSGP 13.1% 12.57 14.78 85% Workday Inc. Class A WDAY 13.1% 6.79 9.67 70%
(MORE TO FOLLOW) Dow Jones Newswires
August 20, 2025 11:01 ET (15:01 GMT)
MW The S&P 500 is at its most expensive by this -2-
Intuit Inc. INTU 13.0% 10.36 11.21 92%
Fortinet Inc. FTNT 11.2% 9.26 11.24 82%
Autodesk Inc. ADSK 10.7% 9.38 11.16 84%
Airbnb Inc. Class A ABNB 9.7% 6.67 12.46 53%
Vertex Pharmaceuticals Inc. VRTX 9.7% 8.61 9.55 90%
Source: FactSet
These growth projections are based on consensus estimates among analysts polled by FactSet for calendar 2025 through 2027. The estimates are adjusted for companies whose fiscal years don't match the calendar.
In comparison, the projected two-year revenue CAGR through 2027 is 5.4% for the S&P 500 and 9.8% for the Nasdaq-100, according to FactSet.
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-Philip van Doorn
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