Bloomberg Businessweek ICYMI: Why Leading Retailers' Valuations Look "Scarier" Than Nvidia's
Aug 28, 2025
Jonathan Levin, a Bloomberg Opinion markets columnist, dives into the paradox of retail giants like Walmart and Costco. He reveals how their high valuations may pose risks, suggesting that perceived safety can invite market corrections. Levin contrasts these retailers with Nvidia’s growth potential, examining the implications of investor sentiment. He also discusses the pressures on Federal Reserve Chair Jerome Powell, emphasizing the importance of maintaining the Fed's credibility amidst political challenges.
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Retailers’ Valuations Exceed Expectations
- Walmart and Costco trade at unusually high forward P/E ratios that exceed even Nvidia's in some measures.
- This elevated valuation reflects a perception of safety that increases their risk of a sharp correction.
Safety Narrative Inflates Risk
- Investors have driven Walmart to ~3.3 standard deviations and Costco near ~1.7 above their historical averages.
- Chasing safety by inflating multiples can make perceived safe stocks actually riskier.
Scale Limits Future Growth
- Costco and Walmart benefited from a 'sweet spot' economy where consumers cut costs but demand held up.
- Their scale limits future top-line growth, so lofty multiples rest on fragile assumptions.