U.S. corporate equity value tops 400% of GDP, dwarfing historic peaks

JPMorgan strategist David Kelly says the market value of all U.S. corporate equity now exceeds 400% of GDP, far above levels seen during the dot-com boom and Black Monday.

According to JPMorgan Asset Management’s chief global strategist David Kelly, the aggregate market value of U.S. corporate equity has risen to over 400% of GDP, a level unprecedented in the past four decades. This figure surpasses the 244% recorded just before the pandemic and the 204% peak during the 2000 dot-com bubble, and it dwarfs one outlet% ratio before the 1987 Black Monday crash. Kelly’s broader metric, akin to the Buffett Indicator but encompassing private firms, signals extreme overvaluation, especially as AI hype has lifted the S&P 500 by more than 13% year-to-date.

He notes that two major technology companies alone contributed $150 billion in unrealized gains, inflating earnings per share by 50% year-over-year, while stripped-out earnings growth sits near 20%. Kelly cautions that stock prices cannot keep rising unless consumer wages and employment improve, highlighting the persistent K-shaped economy. Complementary data from Bank of America and Apollo Global Management suggest modest spending gains among lower-income households, while Treasury Secretary Scott Bessent claims the K-shape is fading. Kelly expects the Fed to hold rates steady, inflation to drift toward 2%, and GDP growth to average about 2% next year, advising investors to diversify away from concentrated AI bets.