When investors are feeling good, the S&P 500 can take off like a rocket. This was certainly the case in 2024 when the US benchmark share index surged 23%.

It wasn’t just the tech giants like Nvidia, Tesla, and Amazon that soared in value. Shares across the S&P 500 ripped higher on hopes of sustained interest rate cuts that would boost growth and, by extension, corporate profitability.

But what shoots higher when confidence is up can crash to earth when optimism wanes. This has been the story so far in 2025, with investors questioning the outlook (and the lofty valuations) of last year’s risers.

According to analyst Kathleen Brooks of XTB, “momentum and growth had been powerful drivers of the S&P 500’s rally in 2024 [but] they have now reversed“.

This switch has seen “value shares outperforming” growth and momentum stock in recent days, Brooks noted. She added that “it’s too early to know if this is a trend, but it is definitely something to watch“.

Rising gloom

US shares are selling off for a variety of reasons, including:

• Signs of stubborn inflation that may limit global interest rate cuts.
• Strong US economic data that could temper rate cuts by the Federal Reserve in particular.
• Fresh fears over China’s economy.
• Worries over immediate new trade tariffs from US President Trump.

Some of these concerns aren’t new. However, the huge valuations on S&P 500 shares are making investors reassess whether current stock prices accurately reflect the risks and challenges ahead.

The forward-looking price-to-earnings (P/E) ratio on S&P 500 stocks is currently an enormous 29.5 times.

In this climate, it’s perhaps no surprise to see demand for US value shares picking up. Low valuations leave a wide margin of safety in case of earnings shocks related to macroeconomic events.

A value share to consider

As a long-term investor, my bullish view on the S&P 500 remains in tact. History shows that share prices always rebound following crises. And I’m expecting the US stock market to continue its decades-long ascent, driven by the ongoing technological innovation and the large domestic economy.

However, I can take steps to reinforce and protect my portfolio by adding some value stocks. Alphabet (NASDAQ:GOOG) is one I think is worth serious consideration today.

For 2025, the Google and YouTube owner trades on a forward P/E ratio of 21.8 times. This is comfortably below the S&P 500 average of near 30 times.

It’s also some distance under an average of 47 times for the index’s broader information technology sector.

Alphabet’s cyclical operations leave it vulnerable during economic downturns. It also faces increasing competition from other search engines and social media providers.

However, the tech giant also has considerable growth potential as the digital economy continues expanding. I’m particularly taken by its progress in the field of artificial intelligence (AI) and its potential in other growth sectors like cloud computing and autonomous vehicles.

In the current climate, I think buying cheap US shares like this is a great idea to consider.