The U.S. stock market reached its most expensive valuation ever, rebounding strongly from the early spring tariff blow.

The NASDAQ Composite, for instance, has surged over 40% since April 8, extending a decade-long bull market in growth stocks driven by cloud computing and generative artificial intelligence (AI).

Equity markets are now trading at valuation levels surpassing even those of the 1999 Dot-Com Bubble and the 1929 rally leading up to the Great Depression.

Record stock market valuation levels

Extreme valuations such as these are rare and often precede periods of turbulence, as evidenced by the aforementioned Great Depressio and NASDAQ falling three consecutive years and ultimately plunging 78% from its March 2000 peak following the Dot-Com Boom. 

The central question is thus whether the momentum signals the start of another bubble or whether we might be witnessing a new equilibrium in an economy increasingly defined by shifts in the technology sector.

Indeed, large growth tech stocks such as Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and Apple (NASDAQ: AAPL) have not only outpaced small caps and value stocks, but their performance relative to the S&P 500 (SPX) is also vastly higher than it was in the late ‘90s. 

Market concentration is also higher than in previous cycles, as the “Magnificent Seven” stocks now command record weight in indexes. 

Of course, it can also be argued that the record numbers are driven by exponentially larger earnings. Nvidia, for example, has seen unprecedented gains, making its stock less reliant on hype than many Dot-Com era favorites.

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