Hello Innovator!

Last week, we took a close look at the Innovation Premium metric and why you should be aware of, and actively monitoring, your company’s Innovation Premium. This week, we build on that lesson by presenting an analysis of estimated Innovation Premium across the Fortune 500.

Here’s what you’ll find:

• This Week’s Article: Who’s Earning Future Value? Who’s Running Out of Time?

• Share This: 3 Data-Driven Breakdowns of the State of F500 Innovation Premiums

Don’t miss our latest episode:

Who’s Earning Future Value? Who’s Running Out of Time?

Last week, we established that you can be building new things and still lose the market. What matters is whether the outside world sees enough credible momentum to price in future returns.

Innovation premium isn’t a vanity metric, it’s a market signal. It reflects how much investors believe your company has a future, not just a present.

And that belief is priced into your Innovation Premium. (Or not.)

This week, we’re sharing a model that estimates how much of a company's value comes from belief in future innovation. And to show you how it comes to life, we’ve run an analysis across much of the S&P 500.

Using consistent assumptions across 397 public companies, we built the Innovation Premium Index, a model estimating how much of each of these public company’s valuation is driven by market expectations of future growth.

We based the index on custom P/E ratios tailored by industry. Instead of relying on the market’s implied P/E, which bakes in unpredictable investor sentiment, we assigned a consistent valuation multiple to each company based on the norms of its sector. Retail and industrial firms were typically modeled at 12.5x or 17.5x earnings. Tech, fintech, and healthcare companies used higher benchmarks like 20x, 27.5x, or even 35x where appropriate.

This approach removes sector bias while keeping the analysis grounded in business reality. The goal wasn’t to smooth the numbers, but rather to reflect how each sector is normally valued so we could clearly see where belief in future growth is inflating value above those fundamentals.

By applying a consistent but tailored benchmark ratio across companies, we strip out the noise and isolate the signal: how much of a company's valuation is based on belief in future innovation, not just earnings today. It also gives us apples-to-apples comparisons across the index.

This is how we make future value visible. And measurable.

Here’s what we found.

Insight 1: The Top Performers Aren’t Just Riding Momentum

These companies have convinced the market that they’re building new growth engines. And that those engines are already in motion.

Top 5 by innovation premium (as % of market cap):

• Interactive Brokers – 81.9%

• Chewy – 80.4%

• Costco – 78.8%

• Equinix – 77.7%

• Intuitive Surgical – 74.8%

This isn’t just a valuation quirk. It’s a bet. A bet that these companies have credible, scalable, high-margin growth coming that hasn’t hit earnings yet.

This is the free prize inside.

When innovation leaders succeed in telling the right story about their future, and then backing that story up with tangible outcomes, their company’s reap the rewards in the form of increased value above and beyond what today’s operations would indicate.

Insight 2: It's Not Just a Tech Story Anymore

The biggest surprise? Software firms aren’t leading this list. (At least not right now.) The top performers come from finance, retail, real estate, and healthcare. That doesn’t mean tech is out of favor. It means other sectors have done a better job of making their future visible and investable.

Belief spans sectors. 
Costco, a retailer; Equinix, a real estate infrastructure play; and Intuitive Surgical, a medical device leader, are all in the top 10. Proof that the market rewards clarity of future value, not just category buzz.

Infrastructure and logistics.
Companies like Equinix, GXO Logistics, and Commercial Metals are pulling belief premiums thanks to platform economics and expansion capacity.

Consumer brands. 
Orgs like Chewy are rewarded for data-driven loyalty, DTC dominance, and adjacencies that haven’t hit the P&L yet.

The companies showing low or negative premiums?
Mostly traditional energy, utilities, and financials.
Not because innovation is impossible there. The market simply isn’t buying the narrative yet.

As we outlined last week, innovation premium is driven as much by story as by numbers. The market doesn’t wait for results. It moves on belief. And belief is built through narrative: a credible, visible, and emotionally resonant signal that the company’s future is already under construction.

If that signal is missing, even good work can go unrecognized.