The Nasdaq 100 is no longer just enjoying a strong run. Its 10-year gain of more than 640% has surpassed several of the biggest market booms in history, according to Ben Carlson of Ritholtz Wealth Management, as quoted on Yahoo Finance.
The Dot-Com Era Remains the Closest Parallel
The late-1990s Nasdaq rally remains the clearest modern comparison to today’s AI boom.
The study found that the internet bubble began in February 1998, peaked in February 2000, and collapsed shortly afterward in March 2000.
Internet-related parent companies delivered returns of more than 570% during that period, compared with roughly 55% for the broader market.
AI Faces the Valuation Challenge: Still Potential Ahead?
Despite growing concerns over an artificial intelligence (AI) bubble, the recent surge in the Nasdaq 100 still appears far more restrained than the explosive rise seen during the dot-com era, according to LPL Financial chief equity strategist Jeff Buchbinder, as quoted on Yahoo Finance.
Buchbinder noted that comparisons between today’s AI boom and the late-1990s internet frenzy are reasonable. However, the magnitude is vastly different. Since ChatGPT’s debut, the Nasdaq 100 has climbed more than 140%, compared with the staggering 1,090% gain recorded during the dot-com bubble before peaking in March 2000, per the source.
What History Suggests About AI
History’s most unusual bubbles do not necessarily imply that AI is destined to fail.
Instead, they suggest that markets often recognize transformative technologies long before they fully understand how to price them.
Bottom Line
Oxford Economics estimates that global AI spending could jump from $340 billion in 2025 to roughly $3 trillion by 2035, as quoted on the above-mentioned Yahoo Finance article. While debt funding will be needed to support this massive spending, the sheer scale of capex growth highlights the expected demand for AI in the coming years and the potential profitability associated with this technology.
Global spending for the AI infrastructure market is projected to total $1.37 trillion in 2026 alone. The market is dedicated to support Generative AI, with total investment expected to reach nearly $3 trillion by 2028 and over $5 trillion by 2030, per McKinsey and Company.
Hence, investors can consider pure-play AI ETFs and Big Tech ETFs like iShares U.S. Technology ETF IYW , Global X Artificial Intelligence & Technology ETF AIQ , iShares Future Exponential Technologies ETF XT, Global X Robotics & Artificial Intelligence ETF BOTZ and ARK Autonomous Technology & Robotics ETF ARKQ if they believe the space remains reasonably valued and offers strong long-term growth potential.
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This article originally published on Zacks Investment Research (zacks.com).