Wall Street is flashing signs of a stock market melt-up, or a rapid and unexpected rise in stock prices, and some strategists are drawing uncomfortable parallels to the dot-com bubble of the late 1990s.
The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) hovered at record highs on Monday as markets are having one of the best earnings seasons in years, and a wave of upward revisions has caught even the bulls off guard.
This week, Yardeni Research raised its year-end S&P 500 target to 8,250 from 7,700 after consensus earnings estimates for 2026 and 2027 surged well past the firm’s already-bullish forecasts.
“We’ve never seen consensus earnings expectations rise so quickly for the current and coming years as they have in recent months,” veteran strategist Ed Yardeni wrote on Sunday. “The result has been an earnings-led meltup in the stock market.”
Semiconductor stocks have been gapping up so fast that market watchers are reaching for the playbook from the run-up year to the dot-com crash.
“Since the 3/30/26 low and in particular over the last couple of weeks, it Feels Like 1999,” Evercore ISI strategist Julian Emanuel and his team wrote in a note. “Relatives, friends, doctors, Uber drivers are all talking about AI/Tech stocks.”
But Emanuel and his team point out that enthusiasm in 2026 is built on a firmer foundation than the dot-com era.
In 1999, “dot-com darlings” traded at a median price-to-earnings multiple of around 152 times, meaning investors paid $152 for every $1 of profit. Today’s “AI Class of 2026” trades at roughly 39 times earnings.
“Valuations are high, but not Y2K extremes,” Emanuel wrote.
Semiconductor stocks year to date
(Yahoo Finance)
Still, warning signs are emerging beneath the surface.
On Monday, Yahoo Finance’s Brian Sozzi flagged a concentrated rally beneath the surface, with BTIG strategist Jonathan Krinsky noting that Friday marked just the third time since 1990 that more S&P 500 stocks hit new lows than new highs on a day the index itself set a record.
Peter Boockvar, chief investment officer at Bleakley Financial Group, also flagged that the S&P 500 hit a record high while 5% of its member stocks simultaneously fell to 52-week lows, a phenomenon that has occurred only three other times in history: July 1929, January 1973, and December 1999, the year before the dot-com bubble burst.
“Now, this was not a bear call as we have no idea what part of that time frame we’re in,” Boockvar wrote, “but in terms of the gaping nature of these stocks, there are plenty of echoes.”
No one put it more bluntly than investor Michael Burry on Friday after consumer sentiment hit a fresh low and the jobs report showed a resilient but unspectacular labor market.
“Stocks are not up or down because of jobs or consumer sentiment,” Burry wrote. “They are going straight up because they have been going straight up. On a two letter thesis that everyone thinks they understand.”
Traders on the floor of the New York Stock Exchange on July 28, 1999. (HENNY RAY ABRAMS/AFP via Getty Images)
(HENNY RAY ABRAMS via Getty Images)
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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