The S&P 500’s price-to-sales ratio hit an all-time high of 3.3 in September, meaning that investors’ enthusiasm for companies is outpacing that of their customers. That metric topped out around 2 during the dot-com boom, and at just over 3 during the pandemic’s frothy markets and muted economy.
It’s not just AI hype: As Bloomberg columnist Jonathan Levin noted recently, red-hot Walmart and Costco, both more richly valued than Nvidia on a profits-per-share basis, remain “one of the market’s great valuation mysteries.” And it’s not just the US: The 15 largest global stock indexes are all overvalued or expensive on 10-year lookbacks.
