Gilead Sciences, Inc. (NASDAQ:GILD) has had a considerably better year than the broader market. The stock has surged by over 24% since the start of the year, compared with a 14% return for the S&P 500. The rally has changed the valuation equation. Yahoo Finance recently put Gilead’s normalized forward P/E at approximately 15.5 times. That figure is based on normalized earnings expectations rather than Gilead’s reported 2026 EPS, which has been distorted by acquisition-related IPR&D charges.
That multiple is not particularly demanding for a pharmaceutical company that is growing its underlying business. But Gilead’s reported 2026 earnings are unusually difficult to interpret, making the more important question whether the company’s underlying growth can justify its valuation. There are nine healthcare stocks that rank higher than Gilead in our ranking of the best healthcare stocks to buy according to hedge funds. Check out the complete list here.
The Business Behind the Multiple
The strongest argument for Gilead’s valuation is the performance of its core HIV business. In the second quarter of 2026, Gilead’s total revenue increased 10% year over year to $7.8 billion, while product sales excluding Veklury also increased 10% to $7.6 billion. HIV product sales grew 12% to $5.7 billion, with Biktarvy sales rising 7% to $3.8 billion. That is significant for investors to consider because Gilead is not relying solely on a future pipeline to support its valuation, and its largest existing franchise is still growing.
The company is also adding potential growth drivers. Gilead Sciences, Inc. received FDA approval for Yeztugo, its long-acting HIV prevention option, and in the second quarter announced that the FDA had accepted an application for a potential once-weekly oral formulation for HIV pre-exposure prophylaxis. Gilead also reported that it received FDA accelerated approval for Hepcludex to treat chronic hepatitis delta virus infection in adults without cirrhosis or with compensated cirrhosis. This makes it the first and only FDA-approved treatment for HDV in the United States.
Oncology provides another potential source of growth. Trodelvy sales increased 26% year over year to $457 million in the second quarter, while Gilead received FDA approval of Trodelvy for first-line treatment of certain patients with unresectable locally advanced or metastatic triple-negative breast cancer. Also take a look at our recently published article on Gilead’s HIV Concentration or Pfizer’s Patent Cliff: Which Risk is Easier to Own? for better comparative insight into the stock’s story.
Why the Valuation Is Not as Simple as 15.5x
The biggest complication is Gilead’s aggressive investment in future growth. The company completed its acquisition of Arcellx, Tubulis, and Ouro Medicines, and those transactions produced $11.2 billion of acquired in-process research and development expenses in the second quarter alone. Gilead said these charges were responsible for approximately $9.08 per share of the quarter’s loss.
That pushed reported diluted loss per share to $(8.45) in the quarter, compared with $1.56 a year earlier. Even non-GAAP diluted loss per share was $(6.75), largely because the acquired IPR&D charges are reflected in the company’s 2026 guidance. This is why a conventional trailing P/E is not particularly useful for Gilead right now. The company’s valuation needs to be considered against its normalized earning power, rather than an earnings figure temporarily overwhelmed by acquisition accounting.
But that does not make the acquisitions irrelevant. Gilead spent heavily because it needs new growth engines to complement HIV. Tubulis brings next-generation antibody-drug conjugate technology, while Ouro adds an investigational BCMAxCD3 T-cell engager for autoimmune diseases.
Is 15.5x Cheap Enough?
A 15.5x forward P/E looks reasonable if Gilead Sciences, Inc. can sustain the underlying growth visible in its core business. HIV product sales grew 12% in the latest quarter, product sales excluding Veklury increased 10%, and Trodelvy and Livdelzi are adding to the portfolio.
But the market has already recognized some of that progress. Gilead’s roughly 28% share-price gain over the past year compares with about 15% for the S&P 500. That means the stock no longer has the same valuation cushion it had before the rally. Investors are now paying for both the durability of the HIV franchise and the potential payoff from billions of dollars invested in new technologies.
The bear case is therefore less about a collapse in the existing business and more about whether Gilead can generate enough returns from its acquisitions to justify the higher expectations. Cell therapy remains a weak spot, as second-quarter sales fell 14%, with Yescarta down 12% and Tecartus down 24%, both due primarily to competition.
The Bottom Line
Gilead’s valuation is more defensible than its recent share-price rally might suggest. At roughly 15.5 times, investors are not paying an extreme multiple for a company whose core HIV franchise continues to grow at a double-digit rate. But the stock is no longer a simple value play. Gilead has already outperformed the S&P 500, and its future growth now depends increasingly on whether acquisitions and newer products can expand the business beyond its established HIV base.
At this valuation, Gilead Sciences, Inc. does not need spectacular growth to justify the stock price, but it does need its expensive pipeline investments to start producing the next leg of growth.
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This article is originally published at Insider Monkey.
