the benchmark S&P 500 has risen more than 60 percent, hitting all-time highs despite headwinds ranging from US President Donald Trump’s tariffs to concerns that artificial intelligence (AI) may be overhyped. For investors, the explosive growth has come at a cost: by some measures, US stocks are pricier than ever before.

An investor buying into the S&P 500 last week had to fork over $3.25 for every $1 in revenues generated by its 500 constituent firms, according to GuruFocus, the highest price-to-sales ratio on record. While US stocks look less expensive when compared against forecasts of company profits, the benchmark index is still trading at more than 22 times forward earnings, well above the historical average.

In a poll by Bank of America last month, nine out of 10 fund managers surveyed said they viewed US stocks as overvalued. The market’s sky-high valuation has led some analysts to draw comparisons to the dotcom bubble of the late 1990s. Fueled by excitement over the rise of the Internet, shares on the tech-heavy Nasdaq soared about 80 percent before giving up almost all of their gains between 2000 and 2022.

“Nobody knows what a stock is really worth because its value is based on future earnings,” said James Angel, an expert on financial markets at Georgetown University’s McDonough School of Business. “Only God knows what the future holds. Because of this uncertainty, stock prices always have been and always will be very volatile. A small change in the market’s consensus estimate of future performance can lead to a large and sudden change in value.” Even as investors are increasingly expressing qualms about the price of US stocks, they are not staying away. The S&P 500 set five all-time highs in August alone and is up about 10 percent so far this year, putting it on track to comfortably beat its average annual return in 2025. (Al Jazeera/AFP)