In 2026, the U.S. stock market CAPE is approximately 39.5–41.7, reaching a 25-year high, second only to the dot-com bubble peak in 1999. The AI concept has driven valuation surges, with semiconductor, cloud computing, and AI infrastructure leaders continuing to rise, and a few tech stocks dominating the gains. Unlike in 1999, current AI leaders have cash flow, mature business models, and higher profit margins. The investment boom has expanded to data centers, energy, power grids, and enterprise AI applications. Warnings indicate that the market is highly concentrated in AI giants; if interest rate hikes, AI commercialization underperforms, or profit growth slows, valuations may face compression and volatility. Historical data shows that when CAPE is high, the actual returns over the next decade are often in the low single digits.

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2026-05-23 02:27:19

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Gold Financial reports that on May 23, data shows that the Shiller Price-to-Earnings ratio (CAPE) of the U.S. stock market in 2026 has risen to approximately 39.5 to 41.7, the highest level in the past 25 years, only below the peak of the Internet bubble in 1999 at about 44 times. Analysis indicates that this round of valuation surge is mainly driven by the AI concept, including continuous gains in semiconductor, cloud computing, and AI infrastructure-related tech giants, with a few large tech stocks accounting for most of the S&P 500's gains. The market worries that the current trend is similar to the Internet bubble of 1999.
However, the report believes that, unlike the many unprofitable internet companies at that time, today’s AI leading companies generally have strong cash flows, mature business models, and high profit margins, providing stronger fundamental support. The current AI investment wave has expanded into data centers, energy, power grids, and enterprise-level AI applications. Analysts warn that the current market is highly concentrated in a few AI giants, and if interest rates rise in the future, AI commercialization underperforms expectations, or profit growth slows, the U.S. stock market still faces valuation compression and volatility risks. Historical data shows that after the Shiller P/E enters a high historical range, the actual returns of U.S. stocks over the next ten years tend to be in the low single digits.

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U.S. stocks' Shiller Price-to-Earnings ratio rises to an extreme 25-year high, AI frenzy sparks concerns of a "repeat of the Internet bubble"

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