Yardeni’s view is pretty solid; a 20x P/E isn’t expensive. The key is whether profits can hold up. Hitting 10,000 points in 10 years sounds aggressive, but the logic is coherent. For now, don’t panic at the semiconductor “melt-up” fund-flow signals.

Yardeni believes that the valuation of the U.S. stock market is not a bubble but is based on the sustained growth of corporate profits. If the U.S. does not enter a recession in the next few years, a forward P/E ratio of approximately 20-22 times for the S&P 500 is reasonable. Although the rapid rise in semiconductor stocks signals some overheating, he remains optimistic in the long term, expecting the S&P 500 to reach 10,000 points by the end of this decade, with about 33% upside potential.