The Nasdaq Is Mirroring the 1990s. It Isn’t a Bubble This Time.

Valuations are more reasonable and profits are stronger than when companies such as Pets.com went public during the dot-com bubble. Above, a sock puppet used in the company’s advertising during the filming of a commercial in 2000. (Bob Riha, Jr. / Getty Images)

It’s time to party like it’s 1997. At least for a few more months.

The Nasdaq Composite was the only major index to close at a record on Wednesday, its fifth of 2025. On the same day, Nvidia, the artificial-intelligence darling, touched $4 trillion in market capitalization, making it the most valuable company in history and more than 7% of the S&P 500.

In short, the tech and AI trades are once again propelling the market. The Nasdaq isn’t just the best-performing index in 2025, it has roughly doubled from its low in late 2022, a stellar outperformance that has led to comparisons to the dot-com bubble that peaked a quarter-century ago.

While there are plenty of reasons to assume that this rally won’t end the way that one did—valuations are more reasonable and profits are stronger—the Nasdaq “continues to eerily track its mid-1990s bull run,” using 1995 and 2022 as starting points, DataTrek Research co-founder Jessica Rabe said in a Thursday research note.

Those two years share more than their status as jumping-off points for rallies. In 1995, the Federal Reserve shook markets by taking up interest rates quickly after a low-rate environment had prevailed, much as it did in 2022.

Both years brought enthusiasm about disruptive technology. Both Amazon.com and eBay were founded in 1995, the year that Microsoft launched Internet Explorer and Windows 95 and Netscape went public. ChatGPT emerged in November 2022, just about a month before the market low.

A look at the charts following the start of 1995 and the Nasdaq’s low on Dec. 28, 2022, shows that the index “has followed its mid-1990s experience to a truly remarkable degree, including both its upward trajectory and occasional pullbacks over the last two and a half years,” Rabe wrote

On Thursday, the 632nd trading day from the Nasdaq’s 2022 low, the index had gained 102% since then. On the comparable day in July 1997, it had risen 91% from the start of 1995.

If that pattern were to hold, the 1990s playbook suggests that the Nasdaq could continue to climb, rallying to the tune of 15% to 20% through the middle of October. From there, pullbacks might be interspersed with gains.

In 1997, the index went on to rally 21% in the 70 trading days beginning in July before pulling back 14% through the start of 1998 due to the Asian financial crisis. It then recovered, jumping 28% between mid-January and April.

Rabe isn’t drawing a comparison with the 1990s as an argument that another bubble is poised to pop. She is still bullish on Big Tech for a number of reasons, saying a strong labor market, easing worry about tariffs, and a potential rate cut could help the sector throughout 2025. Over the longer term, the U.S. tech giants stand to benefit from helping to unleash AI’s revolutionary power.

However, the 1990s do provide a valuable reminder that “bull markets driven by a new disruptive technology occasionally face challenges from growth scares, policy uncertainty, and valuation concerns, all of which investors are currently facing but also overcoming,” she wrote. She thinks Big Tech is still “early in a secular bull run, driven by monetization opportunities around gen AI.”

Other firms are just as bullish about AI and tech in general for many of the same reasons.

Prince’s famous song tells us to party like it’s 1999. By that logic, if today looks like 1997, this rally has a way to go.

Write to Teresa Rivas at teresa.rivas@barrons.com