The S&P 500 Is Near an All-Time High but Trading at Its Lowest Valuation in a Year. Nvidia, Alphabet, and Amazon Help Explain Why.

Despite the S&P 500 reaching near all-time highs with 13.1% year-to-date gains, the index trades at its lowest valuation in a year with a forward P/E of 19.4. Major growth stocks like Nvidia, Alphabet, and Amazon have become cheaper based on forward earnings ratios because their earnings growth is outpacing stock price increases. These companies are investing heavily in AI infrastructure, which could lead to significant margin expansion once their capital investments begin generating returns.