Surging artificial intelligence stocks have driven the US market to record highs this year, drawing comparisons on some metrics to infamous periods of investor mania in the past.
The huge gains of 2025 — in which Nvidia’s market value has more than doubled from its April lows, making it briefly the world’s first $5tn company — have prompted warnings from central bankers and some investors that the AI sector could be in a bubble and that a stock market correction could pose a threat to financial stability.
The US blue-chip S&P 500 index is now more expensive on a cyclically-adjusted 10-year price/earnings ratio — a commonly used valuation metric — than it was before the 1929 Wall Street crash and well above where it was on the eve of the 2008 global financial crisis, according to data group Finaeon. In data going back to the 1840s, the only time valuations have been more stretched has been during the dotcom bubble in 1999.