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Stock Market Bubble: EV/Sales Hits Record Highs
10 Jun
Summary
- EV/Sales ratios for US companies exceed dot-com bubble peaks.
- Nearly 40% of US equity market cap shows EV/Sales over 10x.
- High valuations depend on massive future sales growth.
The current stock market in 2026 exhibits concerning valuation metrics, suggesting it is firmly in bubble territory. A key indicator, the enterprise value-to-sales (EV/Sales) ratio, has reached unprecedented levels.
Goldman Sachs strategist Ben Snider's analysis reveals that stocks with EV/Sales ratios exceeding 10x now constitute nearly 40% of the total US equity market capitalization. This figure surpasses the roughly 35% peak seen during the dot-com bubble.
Furthermore, companies trading at EV/Sales ratios above 20x represent approximately 13% of the market cap. This is also higher than the brief peak observed during the dot-com era, indicating a widespread premium being paid for future sales.
This lofty valuation hinges on the expectation of tremendous sales growth in the coming quarters and years. Investors' confidence in this growth, potentially fueled by AI developments, is critical. If companies fail to deliver on these sales projections, the current market sentiment could rapidly erode.
