A high price-to-earnings ratio usually reflects substantial expectations for a company’s future earnings. But what happens when those expectations remain elevated even as the stock falls below its long-term trading average? That disconnect has become particularly relevant following the recent technology selloff, which has pressured several companies with strong growth prospects but demanding valuations.
The retreat has been especially visible in stocks exposed to artificial intelligence and semiconductor spending. Reuters reported on November 9 that a “month-long swoon” in technology and AI-related stocks in the week ended with the biggest one-day drop for the S&P 500 technology sector in more than six years.
The primary concern for investors is the Democratic victories in the midterm elections, which may lead to sluggish data-center spending, which makes up the center of the market rally. In other news, we compiled a list of the 10 Best Healthcare and Insurance Stocks To Buy Following the 2026 Democratic Midterm Sweep. Access the complete list here for free.
The 200-day simple moving average provides another perspective on these developments. By averaging a stock’s closing prices over approximately 200 trading sessions, the indicator helps investors assess its longer-term price trend. A stock trading below this level may be experiencing sustained selling pressure, although the technical signal alone says little about whether its underlying business is undervalued.
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This holds significance for investors when examining companies with elevated trailing P/E ratios. Some are established businesses generating substantial cash flow, while others have earnings that remain small relative to their market valuations. In both cases, a decline below the 200-day moving average does not necessarily make the stock inexpensive.
With this in mind, we examine 10 high-P/E stocks trading below their 200-day moving averages, focusing on the fundamentals that could help explain the gap between their valuations and recent share-price performance.
Methodology
To compile our list of the 10 High P/E Stocks Under the 200-Day SMA, we screened publicly traded companies to identify stocks trading below their 200-day simple moving averages. We then reviewed Yahoo Finance’s trailing price-to-earnings ratios, retaining companies with trailing P/E ratios of at least 30 or negative trailing earnings. The selected stocks were ranked in ascending order according to the number of hedge funds holding stakes in them, based on Insider Monkey’s hedge fund ownership data.
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10. Arm Holdings plc (NASDAQ:ARM)
Trailing P/E: 200.71
Number of Hedge Fund Holders: 52
Arm Holdings plc (NASDAQ:ARM) has built its semiconductor business around licensing processor technology and collecting royalties from chips using its designs. The company is now expanding into supplying its own designed silicon products, including the Arm AGI CPU, as it increases its exposure to data-center computing.
One important development is Arm’s expansion beyond its traditional intellectual property business into purpose-built silicon. In its second-quarter fiscal 2027 results, the company reported year-over-year revenue growth of 27% to $1.44 billion, with licensing and other revenue increasing 50% to $773 million. However, royalty revenue grew only 8%, illustrating the difference between securing new licensing agreements and generating revenue from chips subsequently shipped by customers. Also read our meticulously crafted list of the best stocks to retire on.
Arm’s data center business represents an important source of growth. Management reported that data center royalties doubled year over year, while planned customer commitments for its new Arm AGI CPU extend into 2027.
The company is also investing heavily in research and development to support its expanding technology portfolio. With a substantial valuation attached to its future earnings, the timing and profitability of new silicon products matter alongside continued licensing growth.
9. Eaton Corporation plc (NYSE:ETN)
Trailing P/E: 35.89
Number of Hedge Fund Holders: 68
The expansion of AI data centers has increased demand for electrical infrastructure, placing Eaton Corporation plc (NYSE:ETN) among the companies supplying essential equipment for increasingly power-intensive facilities. Its products serve data centers, utilities, industrial customers, and aerospace markets, making its business broader than the technology sector alone.
Eaton’s investment case is supported by the growing need to distribute and manage electricity reliably. In its third-quarter 2026 results, organic sales increased 19%, while its Electrical Americas business recorded a 39% increase in the twelve-month rolling average organic orders. Electrical Global orders increased 51% on the same basis, and 20% in Aerospace. Order dollars touched record levels in all three segments, which the company attributed to broad end-market strength.
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These figures demonstrate strong customer demand, but the company’s ability to fulfill that demand efficiently remains equally important. Eaton has been expanding manufacturing capacity and announced an agreement to acquire COL Group to strengthen its European electrical distribution operations.
Despite continued investment in capacity, Eaton reported a record segment operating margin of 25.3% during the quarter, above the high end of guidance, with Electrical Americas margins also improving 230 basis points sequentially. The challenge for the company is maintaining that operating discipline while expanding production and integrating acquired businesses. Its elevated valuation places particular importance on converting strong orders into sustained sales and cash generation.
8. KLA Corporation (NASDAQ:KLAC)
Trailing P/E: 34.67
Number of Hedge Fund Holders: 81
KLA Corporation (NASDAQ:KLAC) provides technologies that help semiconductor manufacturers inspect wafers, detect defects, and control production processes. Its role becomes particularly important as chipmakers adopt more complex manufacturing techniques, where identifying defects and maintaining production yields carry significant financial consequences.
Unlike companies primarily selling computing chips, KLA benefits from the equipment and services required to manufacture them. The increasing complexity of advanced packaging, memory, and leading-edge semiconductor designs has created additional demand for its process-control technologies.
That demand was evident in KLA’s first-quarter fiscal 2027 results. Revenue reached $4.14 billion, above the midpoint of its guidance range of $4.0 billion +/- $200 million, while quarterly free cash flow totaled $1.34 billion. The cash generation is particularly relevant, as it demonstrates that KLA’s exposure to semiconductor investment is supported by an established, profitable operating business rather than solely by expectations of future technological adoption.
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Nevertheless, semiconductor equipment spending remains dependent on manufacturers’ investment decisions. A slowdown in new production capacity or changes in spending priorities could affect demand, even as chip complexity continues increasing. KLA’s operating performance therefore needs to be assessed alongside the capital-spending cycle of its customers.
7. Marvell Technology, Inc. (NASDAQ:MRVL)
Trailing P/E: 46.45
Number of Hedge Fund Holders: 96
Marvell Technology, Inc. (NASDAQ:MRVL) has been expanding its position in AI infrastructure through custom semiconductors and data-center connectivity solutions. Its business benefits from growing requirements for processing and moving information across increasingly complex computing systems.
The strength of that exposure was evident in its second-quarter fiscal 2027 results. Data center revenue grew 46% year over year, supporting a 37% increase in company-wide revenue to $2.739 billion.
However, Marvell’s investment case has changed substantially following its November 2 agreement to acquire Lumentum in an all-stock transaction with an implied enterprise value of approximately $115 billion. The proposed acquisition would combine Marvell’s electrical connectivity technologies with Lumentum’s optical products, expanding its exposure to AI networking. Under the agreement, Lumentum shareholders would receive 4.5 Marvell shares for each share held, representing approximately 33% ownership of the combined company following completion.
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The transaction remains subject to shareholder and regulatory approvals, with closing expected in the first half of 2028. Marvell’s longer-term investment case now involves not only demand for its existing semiconductor portfolio but also the financial and operational consequences of integrating a major acquisition.
6. Tesla, Inc. (NASDAQ:TSLA)
Trailing P/E: 393.65
Number of Hedge Fund Holders: 116
Few companies illustrate the disconnect between current earnings and long-term expectations more clearly than Tesla, Inc. (NASDAQ:TSLA). Although electric vehicles remain its principal business, Tesla is increasingly directing investment toward autonomous driving, robotics, and energy infrastructure.
The significance of this transition is that the company’s valuation extends well beyond its existing automotive earnings. In its third-quarter 2026 results, Tesla reported approximately $28.046 billion in revenue, broadly unchanged from the previous year, while GAAP net income attributable to common shareholders declined to $787 million.
The company has nevertheless continued expanding its autonomous vehicle operations, including introducing Cybercab vehicles into its Austin robotaxi fleet. Tesla also deployed 13.7 GWh of energy storage products during the quarter, demonstrating the scale of its activities outside passenger vehicles.
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These developments explain the range of businesses underlying Tesla’s growth strategy, but their financial contributions remain different. Its automotive operations generate established revenue, while newer autonomous technologies require continued investment and commercial development.
That holds significance for a stock commanding an exceptionally high trailing earnings multiple. Tesla’s future financial performance will depend on how effectively it translates technological development into profitable commercial operations.
5. Applied Materials, Inc. (NASDAQ:AMAT)
Trailing P/E: 31.97
Number of Hedge Fund Holders: 137
Applied Materials, Inc. (NASDAQ:AMAT) stands to benefit from increasingly complex semiconductor manufacturing processes, particularly those associated with advanced memory, leading-edge logic, and chip packaging. Its equipment is used in multiple stages of semiconductor production, making the company a supplier of manufacturing technologies rather than finished chips.
A key element of its investment case is the growing importance of materials engineering. As manufacturers seek improvements in chip performance and energy efficiency, Applied Materials has been developing equipment intended to address challenges in advanced packaging and high-bandwidth memory production.
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Its third-quarter fiscal 2026 results demonstrated the financial strength of this business. Revenue increased 25% year over year to $9.12 billion, while GAAP operating margin improved to 33.7% from 30.6%. The improvement in profitability is particularly relevant because growing manufacturing complexity does not automatically translate into higher returns for equipment suppliers. Applied Materials has also expanded collaborative research through its EPIC Center, which reached 11 engagements with semiconductor companies, universities, and other technology partners.
However, equipment purchases remain tied to manufacturers’ capital expenditure plans. Sustaining growth will require continued customer investment in advanced production technologies, while maintaining the margin improvements already evident in reported results.
4. Intel Corporation (NASDAQ:INTC)
Trailing P/E: N/A
Number of Hedge Fund Holders: 138
Intel Corporation (NASDAQ:INTC) represents a different investment case from the profitable semiconductor equipment companies on this list. The chipmaker is attempting to strengthen its competitive position in processors while expanding its manufacturing and foundry capabilities.
Intel’s negative trailing earnings make it eligible for this screen despite the absence of a positive trailing P/E ratio. Its latest quarterly performance, however, showed improvements in several operating areas. According to its third-quarter 2026 results, revenue increased 21% year over year to $16.5 billion. Data Center and AI revenue rose 78%, while the company reported a GAAP operating margin of 15.3%, compared with 5.0% a year earlier. Access our complete list of the best stocks that could skyrocket in 2027 here for free.
The contrast between its quarterly profitability and negative trailing earnings highlights why Intel cannot be evaluated using the same earnings-multiple framework as consistently profitable chipmakers. Its foundry ambitions remain a major part of the longer-term business strategy. Intel has continued advancing its manufacturing roadmap, including releasing a process design kit for its 14A technology.
Yet manufacturing expansion requires substantial investment, and the company is still navigating pressure in its client computing business. Intel’s ability to generate consistent returns from its manufacturing investments remains central to evaluating whether its operating improvements can support a more durable recovery.
3. ASML Holding N.V. (NASDAQ:ASML)
Trailing P/E: 35.06
Number of Hedge Fund Holders: 140
ASML Holding N.V. (NASDAQ:ASML) occupies an essential position in advanced semiconductor manufacturing through its lithography systems, which enable chipmakers to produce increasingly complex integrated circuits.
The company’s significance extends beyond demand for new manufacturing equipment. Its installed base also generates revenue from maintenance, upgrades, and productivity improvements, providing another source of business activity as semiconductor manufacturers seek greater output from existing facilities. In its third-quarter 2026 results, ASML reported total net sales of €11.7 billion, while Installed Base Management sales increased sequentially to €3.289 billion. Gross margin reached 57.5%, supported partly by demand for productivity upgrades.
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The company also reported that customers were expressing interest in equipment deliveries extending into 2029 and 2030. Management cautioned that currently planned manufacturing capacity for 2027 and 2028 would not fully meet the demand customers were forecasting. This creates an important operational consideration for the company. Strong demand provides commercial visibility, but ASML’s ability to expand production capacity and deliver equipment efficiently remains essential.
The company’s position in semiconductor manufacturing supports its business, although its elevated valuation leaves continued execution and customer investment important considerations.
2. Uber Technologies, Inc. (NYSE:UBER)
Trailing P/E: 40.35
Number of Hedge Fund Holders: 151
Uber Technologies, Inc. (NYSE:UBER) has developed a substantial transportation and delivery platform, with its financial performance increasingly supported by operating scale and improvements in profitability.
The investment case is no longer limited to whether demand for ride-hailing and food delivery can grow. Uber has demonstrated an ability to generate cash from its established operations while investing in additional services and autonomous transportation.
In its third-quarter 2026 results, Gross Bookings increased 20% year over year to $59.8 billion. The company generated $2.5 billion in free cash flow, while GAAP operating income increased 30% to $1.4 billion. These figures are particularly relevant when evaluating Uber’s elevated trailing earnings multiple, because they demonstrate improvements in the profitability of an already large commercial platform.
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Autonomous transportation represents another developing part of Uber’s strategy. The company has been expanding partnerships and preparing to increase the number of fully driverless vehicles available through its platform.
However, the economics of autonomous mobility remain distinct from those of its established ride-hailing operations. The financial implications will depend on commercial deployment and the arrangements Uber establishes with its technology partners. Its cash generation provides a foundation for pursuing these opportunities without making the existing investment case entirely dependent on their success.
1. Broadcom Inc. (NASDAQ:AVGO)
Trailing P/E: 37.51
Number of Hedge Fund Holders: 170
Broadcom Inc. (NASDAQ:AVGO) has become an important supplier to AI infrastructure through its custom accelerators and semiconductor networking products. Unlike companies manufacturing complete computing systems, Broadcom supplies technologies used to process information and connect increasingly complex data-center infrastructure.
Its growing AI semiconductor business has become an important contributor to financial performance. In the company’s third-quarter fiscal 2026 results, AI semiconductor revenue increased 221% year over year to $16.7 billion, supported by demand for custom accelerators and networking technologies.
However, Broadcom’s financial position is not determined by AI hardware alone. Its infrastructure software business generated $8.752 billion in quarterly revenue, increasing 29% year over year. Broadcom also generated $13.665 billion in free cash flow during the quarter, equivalent to approximately 46% of revenue. This demonstrates substantial cash generation alongside its revenue growth.
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The longer-term investment question for the company concerns the sustainability of AI infrastructure spending and the contribution of custom semiconductor programs to Broadcom’s earnings. Although its growth and cash generation provide a strong operating foundation, the stock’s elevated valuation makes the durability of those trends especially important.
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