Good morning, investors. The S&P 500 reached yet another record high on Monday fueled by — you guessed it — another jolt of AI momentum sparked by Nvidia. The company plans to invest $100 billion in OpenAI, and the news inspired another round of concerns of froth and bubbles.
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Old metrics in a new market
Investors’ enthusiasm for artificial intelligence has officially pushed the stock market back to dot-com era levels, according to one classic indicator.
The S&P 500’s cyclically adjusted price-to-earnings (CAPE) ratio just hit 40 for the first time since 2000.
The metric — popularized by Nobel-winning economist Robert Shiller — takes the S&P 500 and divides it by the average of its inflation-adjusted earnings over the last 10 years.
The gauge reached a record 44.2 in November 1999.
That was four months before the S&P 500 peaked in March 2000.
Other signals similarly revive Alan Greenspan’s “irrational exuberance” idea from 1996:
Legacy tech giants are seeing meme-stock-like swings
4% of stocks account for half the S&P 500’s value
The S&P 500 technology sector trades at 29.8x forward 12-month earnings estimates, 34% above its 10-year average
To be sure, the tech stocks of the AI age are far more profitable than those of the internet boom.
Not only that, but fundamentals continue to justify the historic bull market.
“While valuations are unquestionably high, the simultaneous tailwinds of positive earnings revisions and expected Fed rate cuts have been enough to keep stock prices moving higher,” wrote DataTrek co-founders Nicholas Colas and Jessica Rabe in a note to clients.
Indeed, consensus earnings expectations keep rising for large, medium, and small-cap companies into 2026.
Forward earnings are rising for the fourth quarter and beyond (Chart courtesy of Exhibit A)
Meanwhile, S&P 500’s technology has seen larger forward-earnings revisions than any other sector.
“We remain positive on US large caps,” Colas and Rabe said, “but fully expect to see more bearish commentary related to valuation in the days ahead.”
Tech continues to lead the benchmark index (Chart courtesy of Exhibit A)
On Monday, Nvidia — the largest company in the world and biggest beneficiary of investors’ AI obsession — committed $100 billion to ChatGPT creator OpenAI to build out data centers.
Nvidia’s stock climbed more than 3% on the news which suggests that not only does the market believe it can afford the partnership, but it assumes every dollar invested now will compound into further dominance later.
Given the current backdrop, the easy thing would be to call a bubble, according to Mark Malek, chief investment officer at Siebert Financial.
Yet that doesn’t mean it’s time to sell stock and sit on the sidelines.
“If you don’t mind waiting for a long time, go right ahead,” Malek said.
“The bubble will pop at some point. Either the rapidly expanding earnings growth will reverse and start to decline, or the Fed will decide that it’s time to break out the pin and pop it. Neither has happened yet."
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Market snapshot
Elsewhere
🏦 Fed Governor Stephen Miran wants lower rates. A week after starting his new role, Miran outlined the reasons why the central bank’s benchmark rate is far too high. He’s aiming to bring it into the low 2% range. (CNBC)
📊 The US could step in to support Argentina’s economy. That’s what Treasury Secretary Scott Bessent hinted at Monday as he and President Trump plan to meet with Argentine President Javier Milei. Swap lines, currency purchases, and other options are on the table. (WSJ)
📈 Apple stock is now positive for the year. It’s iPhone 17 launch has fueled a new rally, with shares gaining more than 4% on Monday. It’s the last of the mega-cap tech stocks to turn positive in 2025, and analysts have turned increasingly bullish. (CNBC)
Rapid-fire
Shares of Better Home & Finance surged 60% after hedge fund investor Eric Jackson announced a strong bullish take on the company (Yahoo Finance)
Tesla stock climbed after Piper Sandler raised its price target from $400 to $500 (Barron’s)
Oracle stock climbed 5.4% Monday after being named in the TikTok deal and replacing its CEO (Yahoo Finance)
The Dow Jones Transportation Average is down 1.5% this year, diverging from the broader bull market (Barron’s)
Metaplanet announced the purchase of 5,419 bitcoin for $632 million (Yahoo Finance)
Fortune 500 employees haven’t all answered their companies’ calls to return to in-person work (WSJ)
Disney says Jimmy Kimmel’s show will return to airwaves on Tuesday (CNBC)
Last thing
S&P 500's forward P/E now at its highest since January 2021
— #Kevin Gordon (#@KevRGordon)
12:08 PM • Sep 22, 2025
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📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.
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