You're right that if their cash decreased their PE would go down, all else equal. But if they used it to fund a promising venture that would likely increase the

You're right that if their cash decreased their PE would go down, all else equal. But if they used it to fund a promising venture that would likely increase their future earnings more than clipping coupons on the equivalent in t-bills or whatever their cash is sitting in, then their price would probably go up. And so the fact that they allow so much cash to build up might drag down their P/E relative to other companies, counterintuitively.