NYU Professor Aswath Damodaran Flags "Richly Priced" Markets: Analysis of December 2025 Comments

This analysis is based on NYU professor Aswath Damodaran’s December 12, 2025 CNBC ‘Closing Bell’ interview [1], where he characterized global markets as “richly priced across the board.”
Damodaran’s caution aligns with market valuation data: the S&P 500 traded at a forward P/E ratio of ~30.8 [2], well above its long-term average of ~19.4 [0]. Megacap tech stocks mirrored this trend, with forward P/E ratios ranging from ~31-33 for AAPL [3][4], ~30-31 for MSFT [5], ~30.44 for GOOGL [6], and ~29-33 for AMZN [7][8]. META was the exception at ~21-22x forward P/E [9][10]. On the day of the interview, major indexes reacted negatively: S&P 500 -0.86%, NASDAQ Composite -1.25%, Dow Jones Industrial Average -0.53% [0]. Megacap performance was mixed, with GOOGL (-1.41%), AMZN (-1.60%), and META (-0.86%) declining, while AAPL (+0.14%) and MSFT (-0.27%) showed limited movement [0].

1. Damodaran’s “richly priced” assessment applies to both the broad market (S&P 500) and most megacap tech stocks, excluding META.
2. The December 12 market decline suggests investor sensitivity to valuation concerns from prominent experts like Damodaran.
3. Current valuations are dependent on continued strong earnings growth to justify premium multiples; a slowdown could trigger corrections.

• Risks
  : Elevated P/E ratios increase correction risk if earnings fail to meet expectations [0]. Rising interest rates could further pressure high-valuation stocks by reducing future earnings present value [0].
• Opportunities
  : META’s lower valuation (~21-22x) may present relative value compared to peers [9][10]. Investors can monitor earnings reports and interest rate decisions to assess valuation sustainability.

Aswath Damodaran’s December 12, 2025 comments highlight broad market overvaluation relative to historical averages. The S&P 500 and most megacap tech stocks trade at elevated P/E ratios, increasing sensitivity to earnings and interest rate changes. On the interview day, markets declined moderately, reflecting investor concern over valuation risks.