U.S. Stocks Near Dot-Com Valuation Peak as Shiller PE Approaches Record

U.S. equities are nearing their most expensive valuation on record, with the Shiller price-to-earnings ratio less than 5% below its dot-com bubble peak, raising concerns that the market’s AI-driven rally may be pricing in limited downside risk. The Nasdaq Composite (^IXIC) has climbed 8% in May, while the S&P 500 (^GSPC) is up 5%, supported by strong earnings, easing concerns over the Iran conflict and continued investment in AI infrastructure. Nvidia (NVDA), a key driver of the AI trade, is expected to report earnings during the week of May 18, 2026. Investors are also watching how new Federal Reserve Chair Kevin Warsh may respond to accelerating inflation. Northwestern Mutual Chief Investment Officer Brent Schutte warned that inflation “could become a problem for the entirety of the market,” while Carlyle co-founder David Rubenstein said markets appear to be looking past geopolitical risks on expectations that conflict will eventually subside.