Are US Stocks in 2025 Priced Like 1999? Shocking P/E Data From Wall Street

The Nasdaq’s recent surge mirrors the dot-com bubble almost step for step. If history rhymes, the “AI trade” could be walking the same dangerous path.

Every generation has its hype cycle—and today, AI sits in the spotlight. But when you overlay the Nasdaq’s current trajectory against its late-1990s dot-com path, the similarities are striking.

Back then, investors believed the internet would reshape everything (they were right), but valuations outpaced reality. Prices collapsed when expectations couldn’t keep up. Today, AI carries the same promise: massive disruption, endless opportunity.

But hype doesn’t erase math. Earnings, margins, and adoption take time to catch up. The lesson from 2000 isn’t that tech failed—it’s that bubbles can form even around real revolutions.

Gartner’s EPS has compounded at 46% while its stock price is down nearly 50% year-to-date. That kind of divergence doesn’t happen often.

Consulting giant Gartner ($IT) is flashing an unusual disconnect between fundamentals and market sentiment. Over the past five years, earnings per share have grown at a powerful 44% CAGR, and diluted EPS has surged more than 400% since 2020.

Yet, the stock has dropped almost 50% this year, pushing its valuation to record lows. Normally, strong earnings growth and rising profitability drive share prices higher, but here the market seems to be ignoring the fundamentals.

For investors, divergences like this raise interesting questions: is the market overreacting to short-term noise, or do the numbers hide risks that aren’t obvious yet? Either way, Gartner now sits at one of its cheapest levels ever compared to its earnings growth.

Free cash flow per share is up 120% since 2020, yet Adobe’s stock is down 25%. The selloff isn’t about fundamentals—it’s about sentiment.

Adobe (ADBE) is showing a sharp disconnect between business performance and stock price. Over the past five years, its free cash flow per share grew 120%, compounding at 17% annually.

Despite that, the stock has slid 25% from recent highs, giving it a negative CAGR of -5.7%. This divergence suggests investors are punishing Adobe for external factors—like AI hype shifts, valuation concerns, or sector rotation—rather than deteriorating business results.

Fundamentally, Adobe continues to generate strong, consistent cash flow, with a product suite that drives recurring revenue. When the numbers tell one story and the stock tells another, it often signals short-term emotion outweighing long-term reality.

Back in December 1999, the largest stocks traded at a median P/E of 41 before crashing nearly 80%. Today? The median sits at 31—and that’s considered “normal.”

The late 1990s tech bubble is remembered for extreme valuations and a brutal collapse. But when you line up today’s market leaders against those from 1999, the similarities are striking.

Then, giants like Cisco and Oracle traded at nosebleed P/Es of 90 to 200+, driving the median to 41. Today, companies like Apple, Microsoft, Amazon, and Tesla trade at a median P/E of 31.

That may seem lower, but history shows stretched multiples often mean lower future returns. The real question isn’t whether today’s valuations are as extreme as 1999—it’s whether a P/E of 30+ for the biggest companies can truly be justified.

From hot startups to dividend giants, stocks move through six predictable stages. Knowing which phase a company is in can change how you play it.

Stocks evolve just like businesses do. In the start-up stage, prices move mostly on hype and story, with little revenue to back it up. The young stage brings execution risk—can the company scale?

Once traction is clear, the growth stage drives valuations higher on big revenue expansion and narratives like TAM. Companies that survive hit the mature stage, where earnings consistency and cash flow become the focus.

Over time, stocks settle into the stable stage, trading more like bonds as dividends and buybacks dominate. Finally, some hit the decline stage, where prices often fall unless contrarians see restructuring potential.