U.S. Stock Valuations Close In on Dot-Com Bubble Peak

The cyclically adjusted price-to-earnings ratio, or CAPE, was popularized by Yale University economist Robert Shiller and values the S&P 500 against inflation-adjusted corporate earnings over the previous 10 years. A higher reading means investors are paying more for long-term earnings. Its approach toward the 1999 record suggests the AI-driven rally has less room for error, though it does not mean a crash is inevitable.

The CAPE ratio climbed as high as 42.18 as of May 2026, just shy of the dot-com bubble peak of 44.19. The S&P 500 and Nasdaq-100 had risen a further 14% and 24%, respectively, since the end of the first quarter. On June 3, the S&P 500 snapped a nine-session winning streak that began on May 20, while The Motley Fool warned investors to watch for the risks of valuation compression and a sharp pullback.