Industrials valuations surge as AI infrastructure spending boosts ETFs

According to CNBC, the S&P 500 industrials sector is trading at a price-to-earnings ratio above 30, well above its long-term average near 20, as AI data center construction and defense spending draw investor attention to the group. Cinthia Murphy, director of research at VettaFi, said Industrial Select Sector SPDR XLI now has valuations that are very high relative to the S&P 500 and that the sector has matched tech in investor interest. Alphabet forecast 2025 capital expenditure of $195 billion to $205 billion, up from prior guidance of $180 billion to $190 billion, and McKinsey estimates global data center spending could reach nearly $8 trillion by 2030. Murphy also said more than 60 industrials ETFs have taken in about $23 billion in net inflows year to date. The article said Caterpillar and GE Vernova are both up more than 50% this year, while Lockheed Martin rose more than 10% after quarterly earnings beat estimates on both revenue and profit.