US investment giant: This isn’t a repeat of the dot-com bubble
With the recent dip in US tech stocks coinciding with the 25th anniversary of the dot-com bubble’s peak in March 2000, many investors are worrying that history is set to repeat itself.
Indexes of US ‘mega cap’ stocks have fallen 6.7 per cent this year, underperforming all other market sectors, according to data from US investment giant MSCI.
“On the surface, the parallels between then and now are striking. In both periods, transformative technologies — the internet in 2000 and artificial intelligence (AI) in 2025 — have fueled outsized gains for a few dominant firms amid market euphoria,” said MSCI analyst Donald Sze.
However, Sze stated that today’s domination of tech in the US market reflect “stronger fundamentals,” with tech giants more profitable than their dot-com counterparts, accompanied by more robust revenue growth.
“Analysts project stronger ongoing expansion for these companies compared to forecasts for internet companies in 2000,” he added.
The analyst noted that from 1995 to 1999, the US market surged 29.7 per cent annually, far above the long-term annualised average of 10.7 per cent since 1970.
In contrast, from 2020 through 2024, returns have averaged 14.6 per cent, which Sze described as “elevated, but modest compared to those of the dot-com era”.
The dot-com bubble suffered from heightened volatility before its collapse, driven by the Asian financial crisis, Russian default and hedge fund collapses, all of which contributed to a significant spike in risk.
In comparison, volatility has been more mild in the 2020s since the pandemic subsided, despite events such as central bank rate hikes and the Russian invasion of Ukraine.
Volatility in the dot-com bubble and today
Meanwhile, though market concentration in technology stocks is at an all-time high in the US, the build-up has been significantly slower.
In the two years leading up to March 2000, tech stocks accounted for 74 per cent of all market gains, compared to 56 per cent over the most recent two years.
Similarly, the top 10 return-contributing stocks accounted for 67 per cent of total gains in 2000, versus 53 per cent in 2025.
“The rise of technology stocks has unfolded over a decade rather than in a rapid surge, and the disconnect between earnings and delivered growth has been more contained,” said Sze.
US market concentration in tech stocks
