The a16z Show · Wednesday, September 30, 2026
Despite market highs, trading multiples for the S&P 500 are down, indicating that performance is driven by fundamental earnings rather than inflated valuations. This contrasts with the dot-com boom, where companies traded at extremely high P/E ratios, unlike today's market where earnings multiples are below 20.
“So the market has reached new highs, and at the same time that it has reached new highs, the trading multiples of the market are actually down.”
“So stocks are up about 20% while multiples are down about 20%. So what that means is that the performance is driven by fundamental earnings, right, not increased multiples.”
“This is nothing like the dot com boom in that way where some of the highest market cap companies in the world had their massive stock run-ups based on increases in their trading multiples, and they were trading in many cases for 100 times PE.”