Goldman Sachs: Industrials Are "Even More Expensive" Than Tech Stocks; Global Sector Pricing Logic Has Shifted

Goldman Sachs Research's latest sector valuation analysis shows that the industrials sector's 12-month forward P/E ratio is now higher than that of the technology sector, indicating that relative valuations among global equity market sectors are shifting. The industrials sector's forward P/E stands at 19.4x, above the overall market's 16.7x and the technology sector's 16.2x. Industrials also rank among the more highly valued sectors in global equities, trailing only growth stocks at 20.6x, consumer staples at 18.7x, and consumer discretionary at 18.7x. The research compared sector and style valuations across the MSCI Global Index with historical data over the past 20 years. This valuation gap is noteworthy because the technology sector has historically commanded a premium relative to many other sectors. Goldman Sachs data shows communication services at a forward P/E of 18.1x and health care at 17.7x. Utilities stand at 15.1x, materials at 14.6x, and value stocks at 14.0x. By contrast, the energy sector's forward P/E is 12.8x, while financials have the lowest P/E among all sectors at 12.7x. This divergence highlights the significant gap between current valuations of global equity sectors and long-term historical levels. These figures come as investors assess sector allocation amid changing expectations for interest rates, earnings growth, and capital expenditure. Goldman Sachs also noted that overall U.S. equity valuations have pulled back this year, with the S&P 500's forward P/E falling from about 22x to 19x, while valuations relative to bonds have remained broadly unchanged.