Stock Market CAPE Ratio Hits 42.2, Highest Since 1999 as AI Boom Inflates Big Tech
Updated
Updated · Yahoo Finance · Aug 23
Stock Market CAPE Ratio Hits 42.2, Highest Since 1999 as AI Boom Inflates Big Tech
3 articles · Updated · Yahoo Finance · Aug 23
Summary
At 42.2, the S&P 500’s Shiller P/E now stands at its highest level in more than 26 years, nearing the dot-com era peak of 44.2.
That CAPE reading compares current prices with 10 years of inflation-adjusted earnings, putting today’s market far above its post-1990 average of just over 27.
Big tech’s AI-driven surge is the main force behind the rich valuations, rather than the profitless internet speculation that defined much of the late-1990s bubble.
The comparison still carries a warning: after the S&P 500 peaked at 1,527 in March 2000, the index went on to lose about 50% over the next 2.5 years.
With the CAPE ratio mirroring 1999, are AI-driven mega-caps justifying their premium, or are investors ignoring a massive infrastructure spending bust?
If forward earnings remain strong, is the historically high Shiller ratio a false alarm masking a fundamentally transformed tech-driven economy?