U.S. stock valuations approach the peak of the internet bubble, with the Shiller P/E rising to an extreme level not seen in 25 years

BlockBeats News, May 15 — The valuation of the U.S. stock market continues to rise, with the cyclically adjusted price-to-earnings ratio (Shiller P/E Ratio) reaching 42.18, approaching the 44.19 historical high during the Internet bubble period in 1999.

This indicator is smoothed based on long-term earnings and is used to measure the overall market valuation level. Currently, driven by AI-powered technology stocks, U.S. stocks are in one of the most expensive ranges in the past 25 years.

Analysis indicates that although high valuations do not directly mean the market will decline soon, they significantly increase sensitivity to “fault tolerance space” in earnings and macroeconomic data. If fundamentals show slight underperformance, the market may amplify volatility reactions.

Historical comparisons show that after the burst of the Internet bubble in 2000, the S&P 500 index fell about 50% within two years and did not return to previous highs until 2007.

The report also mentions that under the current valuation structure, non-cash flow assets like Bitcoin appear “cheaper” in relative price terms, potentially attracting some asset reallocation when risk appetite shifts in the future, but related trends remain highly uncertain.

Overall, the current market environment is more akin to a fragile balance driven by high valuations rather than a broadly supported undervalued zone based on fundamentals.