In a selloff, valuation discipline is everything.

Yet one powerful signal often gets ignored: Forward P/E vs. the S&P 500.

Most focus on absolute P/E, but the relative view reveals mispricings the market misses.

3 must-know cases for investors

Case 1: Multiple Expansion – $WMT

Walmart’s forward P/E has steadily widened vs. the S&P 500 — now trading at a 60% premium.

But with tariffs returning, is that valuation stretch still justified?

Case 2: Stable Valuation – $MSFT

Microsoft’s forward P/E has closely tracked the S&P 500 over time, showing remarkable consistency.

No wild swings. No big discounts or premiums.

Case 3: Multiple Contraction – $NVDA

After years of trading at a steep premium, Nvidia’s forward P/E has fallen sharply — now nearly in line with the S&P 500.

Is the market offering a rare opportunity… or pricing in a reset?

Takeaways: in volatile markets, context is everything.

Forward P/E relative to the S&P 500 helps cut through noise — whether it’s $WMT stretching, $MSFT staying steady, or $NVDA compressing.

Ignore it, and you miss the signal.