illustration of a large stylized wave shaped like an eagle’s head. A person rides the crest on a surfboard while another sits calmly in a meditative pose on a smaller wave below

Illustration: Satoshi Kambayashi

Dec 10th 2025|4 min read

In America, as markets surge despite fears of an artificial-intelligence bubble, one fact looms large: stocks are very expensive. That is true not just for AI darlings such as Nvidia and Microsoft but for the broader market. Consider a popular long-term valuation measure, the cyclically adjusted price-earnings (CAPE) ratio, which benchmarks companies’ stock prices against the long-term trend in their profits. On that measure the S&P 500 index of large American firms has only ever been so expensive at the peak of the dotcom mania.

Signage for Mizuho Bank Ltd., a unit of Mizuho Financial Group Inc. (MHFG), at one of the bank's branches in Tokyo, Japan.

Asia’s inexpensive AI stocks should worry American investors