Overview
- In his latest shareholder letter, Bill Ackman argued that the rich prices of the 10 largest S&P 500 companies make sense because analysts expect their earnings per share to grow by more than 20% on average over the next two years.
- Ackman said some mega-cap names still look like bargains at current levels and disclosed that Pershing Square added to Amazon and opened a new position in Meta Platforms.
- After a recent pullback, the S&P 500 trades at about 20.6 times expected earnings, which sits above its long-run average but below roughly 22 at the start of the year.
- Market concentration is magnifying headline valuations, as the top 10 companies now make up about 38.5% of the S&P 500’s total value.
- Across those top 10 stocks, forward price-to-earnings ratios range from about 19.6 for Meta to 184 for Tesla, with a median near 26, following outsized 2023–2025 gains led by AI-linked firms and fresh worries in 2026 about how durable earnings will be.