With the S&P 500 sitting at record levels and trading at 28 times earnings, investors are weighing strong AI driven corporate results against the risk that expectations are set too high. That mix of optimism and unease can create openings that feel easy to miss. This article walks through three large cap stocks from our U.S. index funds screener that are closely tied to this earnings story and explains how today’s setup could matter for your long term portfolio.

The three stocks highlighted below are only a small sample from this theme, and the full screen surfaced 162 more large cap companies with equally compelling narratives that are not covered here. To identify ideas that fit your own risk profile, head straight to the Large-Cap U.S. Index Funds screener to filter, compare and analyze potential high conviction positions.

Lumentum Holdings (LITE)

Lumentum Holdings is a photonics manufacturer that supplies optical chips, lasers and modules used to connect cloud data centers, AI infrastructure and advanced industrial equipment. Its revenue comes from customers across the United States (about $523 million), Thailand ($494 million), Hong Kong ($461 million), Mexico ($318 million) and other regions, reflecting a broad global footprint. With a market cap of roughly $63.3 billion, Lumentum sits firmly in the large cap tech camp that many index funds track.

Investors looking at Lumentum today are really asking how long the AI data center buildout can keep favoring its optical components and lasers. Forecasts point to fast growth in revenue and earnings and recent quarters showed strong demand tied to GPU heavy cloud projects, while guidance for early FY2027 signals confidence in that momentum. At the same time, a rich valuation, insider selling and a balance sheet funded entirely by higher risk liabilities mean expectations are high and execution needs to stay tight. If Lumentum can turn this surge into durable cash generation rather than a short cycle spike, the stock could look very different to long term holders than the headline P/E would suggest right now.

Lumentum’s AI fueled order book and rich P/E are only half the story. Get the full picture with the 4 key rewards and 2 important warning signs to see what might be hiding behind that balance sheet and insider selling.

Build your own AI infrastructure shortlist

Lumentum Holdings and the other two stocks in this article are just a few examples that surfaced from a single screener. Use our customisable Screener to combine filters for valuation, growth, balance sheet strength and risks so you can shape a watchlist that fits your style, or tap into our curated Investing Ideas for ready made themes.

Microchip Technology (MCHP)

Microchip Technology makes the chips, analog components and memory that sit inside cars, industrial equipment, data centers and connected devices, along with licensing its SuperFlash memory technology. Most of its roughly US$5.1b in revenue comes from Semiconductor Products at about US$4.9b, with around US$173 million from Technology Licensing. The company’s market cap of about US$44.2b puts Microchip firmly in the large cap bracket that many index funds track.

Microchip Technology gives you direct exposure to the AI and data center spending story through its microcontrollers, analog chips and FPGA products that are going into next generation servers, edge AI devices and power systems. Recent quarters brought strong revenue and earnings, upbeat guidance and a growing pipeline tied to data center and aerospace, which helps explain why analysts expect rapid earnings growth and see upside to the current share price. The flip side is a very high P/E, substantial debt and insider selling, so a lot already needs to go right. For investors willing to weigh that trade off, the full Microchip narrative lays out how the AI cycle, margin targets and balance sheet could reshape the risk reward profile from here.

Microchip Technology’s surging AI and data center demand sits against a rich P/E and meaningful debt, which could be masking the real story. Read the analyst forecasts for Microchip Technology to see what the market might be missing.

Live Nation Entertainment (LYV)

Live Nation Entertainment runs a global live entertainment ecosystem that spans concert promotion, venue ownership, ticketing through Ticketmaster, and high margin sponsorship and advertising. Most of its roughly US$26.3b in revenue comes from Concerts at about US$21.7b, with Ticketing adding around US$3.3b and Sponsorship & Advertising about US$1.4b, while Other and Eliminations slightly reduce the total. The company has a market cap of about US$43b, firmly placing it in the large cap bracket that many index funds track.

Investors looking at Live Nation Entertainment today get a pure play on the global appetite for live experiences, supported by record fan attendance, growing venue capacity and a ticketing platform that feeds high margin sponsorship revenue. The company is navigating forecasts that point to rapid earnings growth and a shift to profitability, while still carrying balance sheet risk from heavy borrowing and remaining under a regulatory spotlight around Ticketmaster and market concentration. With the stock underperforming the broader market over the past year and trading close to estimated future cash flow value, the key question is how that mix of growth potential, legal scrutiny and funding risk could play out in a market that is rewarding large cap S&P 500 stocks tied to clear earnings stories.

Live Nation Entertainment’s surging fan demand and shift toward profitability could be masking a bigger story around earnings quality and regulatory risk. Read the analysis report for Live Nation Entertainment to see what might really be driving this setup.

Seeking Alternatives Before The Crowd Moves

Fresh stock ideas can move from quiet to crowded quickly. Screen for potential breakout momentum while the data still feels under the radar for now, and consider acting early.

• Spot income workhorses that aim to keep portfolios flying through market swings by scanning the 8 dividend fortresses before high yields attract broader attention.
• Track fast moving themes where AI spending is beginning to affect company fundamentals and filter for focused opportunities with the 57 AI infrastructure stocks while it still plays a meaningful role in the data.
• Look for materials leaders that could participate in the next commodity move by focusing on the curated 9 top copper producer stocks while it remains less widely followed.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.