S&P 500 CAPE nears dot-com peak as AI concentration raises valuation risk

The S&P 500’s Shiller price-to-earnings ratio rose above 42 at the May 14, 2026, close, nearing its record 44.19 peak from December 1999 and reviving Wall Street concerns about stretched equity valuations as U.S. stocks hit fresh highs. The cyclically adjusted P/E ratio, or CAPE, stood at 42.18, up 0.34 point, or 0.81%, from the prior session, according to Multpl data. Its long-term mean since 1871 is 17.38, with prior extreme readings seen before the 1929 crash and at the height of the dot-com bubble. Market concentration is also elevated. The 10 largest S&P 500 constituents now account for more than 40% of the index, compared with about 27% during the 2000 bubble. Gains have been led by Nvidia (NVDA), Apple (AAPL) and Microsoft (MSFT), with Nvidia’s market value reaching $5.7 trillion. Deutsche Bank said 57% of institutional investors view an AI valuation pullback as a major market risk.