The central debate on Wall Street is starting to sound something like this: Bears say, “It’s starting to look like 1999 – sell tech stocks,” while bulls counter, “It’s starting to look like 1999 – buy tech.” This disagreement over whether to embrace or recoil from the market’s resemblance to the final frenzy of the late ’90s tech-dominated bull market grows in part from certain technical extremes being reached combined with atmospheric similarities to a former moment of all-consuming attention on a tech innovation wave. The semiconductor sector as measured by the Philadelphia Semiconductor Index has only ever been this overbought relative to its 200-day moving average twice: In early 2000 and before that in 1995. In 2000, it coincided with a generational market peak. In 1995, semis fell into their own bear market even as the broad indexes continued higher. The only times before last week when the S & P 500 hit a record high with so many of its stocks reaching fresh 52-week lows were at or near important market tops, including near the end of the ’90s bull. Bespoke Investment Group added on Monday: “Since 1996, the only other period where we saw the S & P at record highs with fewer than 60% of stocks above their 50- and 200-DMAs was from late 1998 to early 2000.” Of course, that’s not in itself a sell signal. Late 1998 was a fabulous time to be loaded up on tech stocks; the Nasdaq more than tripled between the autumn 1998 low and the ultimate March 2000 peak. .SOX YTD mountain Philadelphia Semiconductor Index, YTD Investors and strategists are properly noting that in the current market, the most aggressive price appreciation is occurring in shares of companies with the fastest upside earnings forecast momentum. Micron Technology , the current lead horse in the semi stampede, has seen its fiscal 2027 profit projection literally double in under three months. As for the overall market, the S & P 500 fell from a high of 23-times forward earnings in late October to a low near 19 at the March 30 correction low and has since recovered half of that P/E decline, at just above 21. Bank of America’s tech-equity-trading desk argued Monday that the bears are misreading today’s environment through the scrim of late 1990s hindsight, in which the early network builders used debt and excessively ambitious growth forecasts to overbuild the fiber backbone which later benefited the internet platform players and consumers alone. .SPX YTD mountain S & P 500, YTD “Interestingly (and importantly) the ACTUAL free-riders of the post-1990’s internet buildout — were Amazon, Google, Meta and Microsoft, today’s capex spenders, or network builders,” BofA points out. “They were the high bandwidth, high usage, SaaS, public cloud, internet services companies that became of the biggest often ‘asset’ light businesses in the world. Their business models benefited massively from the network laid by those early telecom builders. They clearly don’t believe their services can be ‘free riders’ this time around.” I should note, back in the ’90s, investing veterans constantly pointed out that tech companies were among the most cyclical and thus deserved discounted valuations. While it’s true that network-hardware and data-storage leaders of that era suffered a brutal comeuppance, that notion was of little help in navigating the tape since then, as tech in general has traded at a healthy premium to the broad market far more often than it has dipped to a slight discount. Not as giddy While semis have gone vertical, the headline indexes have not gone nearly as far or as fast as in the ’99 crescendo. The Nasdaq Composite more than tripled in the final 18 months, as noted. I was there covering markets at Barron’s and it’s fair to say things don’t now feel as giddy. Recently, the Nasdaq has more than doubled in three years. Over the past six months the S & P 500 is ahead by a mere 8%. We are now girding for a handful of enormous IPOs of relatively mature AI leaders that will debut as megacaps. But in 1999 things were wilder. There were more than 500 IPOs, mostly smaller and less mature, whose shares average a first-day pop of some 70%. .IXIC YTD mountain Nasdaq Composite, YTD Because of the communal memory of that bust and the lost decade that followed, and because skepticism sells better in the digital media realm today, there is a bit more scolding than hyping going on in the broad market conversation. The ’90s boom was broadly experienced and enjoyed by the public: The highest-ever consumer confidence readings occurred in the months ahead of the March 2000 market peak and they are now running at a bit more than half those levels. Still, there are plenty of uncomfortable echoes. The disengagement of the tech-driven indexes from the parts of the economy that sit closest to everyday consumers occurred both then and now. The recent grinding underperformance of the equal-weighted consumer discretionary stocks seems to gain urgency Monday, falling nearly 2% and placing it 12% below its early 2026 high. Big bank stocks, a favorite of Street bulls entering the year, have lagged the S & P 500 by 10 percentage points over the past three months. .VIX YTD mountain Cboe Volatility Index, YTD One feature of the final melt-up stage in 1999 was the way both equity volatility gauges and bond yields rose along with share prices. It was a highly kinetic, sometimes erratic environment with price-insensitive tech capex humming along. While neither Treasury yields nor the VIX are in strong uptrends, both have shown perkiness lately, including on Monday, when the 10-year Treasury yield lifted to 4.4% and VIX added nearly a point to 18.4 despite the S & P too rising gently to another record. Burry and others weigh in Famous caller of the housing bust Michael Burry, now a widely followed investment newsletter scribe, over the weekend called the action unequivocally bubbly and suggested getting out of stocks that have gone parabolic. David Snyder, founder of Journey 1 Advisors and recently revealed as my longtime Mystery Broker source, is convinced the semi-centric acceleration in tech stocks is mirroring the final stage of this secular bull market which began in 2009. This long-running advance has delivered 15% real annualized S & P 500 returns over 17 years, closely matching what the secular bulls from 1949-1996 and 1982-2000 delivered. In both prior cases, the last five years were carried by a transformational technology (the first semi boom in the ’60s, internet in the ’90s). Cantor Fitzgerald market strategist Eric Johnston remains tactically bullish but is citing some festering concerns around earnings quality and the sustainability of the AI bonanza. “About 50% of the hyperscaler $2 trillion cloud backlog is from two companies, OpenAI and Anthropic who have a total of about $70 billion in annualized revenue, though growing at an exponential rate,” he notes. It’s a bit uncomfortable — or perhaps simply unfamiliar — to see a tech cycle becoming more asset-intensive and being led by companies far down the value chain in the memory and networking-gear subsectors. For years, bulls insisted the elevated valuations of the megacap tech cohort was justified by their superior free-cash-flow-generating business models. Most of what would be free cash flow among Amazon , Alphabet , Meta and Microsoft is now being handed to the hardware providers, augmented by some borrowing. What to do about it It’s also noteworthy and amusing that so many of the stocks now pacing the boom are the very same names that starred in a prior generation’s tech boom. Stalwarts of prior cycles such as Micron , Corning , Qualcomm , Western Digital . And let’s not forget Intel , whose market value has gone vertical and finally exceeded both its prior 2000 peak and the present market cap of Exxon Mobil . What’s sometimes lost in the debate over whether it’s a bubble “already” or not a bubble “yet”: We are not guaranteed a close rerun of the 1999-2000 extremes. Just because things got crazier then doesn’t mean that’s ahead of us. Simply because that boom led to awful forward 10-year returns, that may not await us now. It seems wise simply to be aware of where the market is making the heaviest bets to understand what one owns. Some 18% of the S & P 500 is now semis. More than half the index is an AI trade in one way or another. Perhaps rebalancing a portfolio among indexes and sectors while staying alert for clear tape breakdowns is a middle way through this kinetic period. Note, too, that since there have been several bold assertions that the market was in another 1999 moment over the past decade or so. In early 2020, before Covid hit, hedge fund luminary Paul Tudor Jones likened the backdrop to “early 1999.” Perhaps it would have carried on that way without the pandemic reset. But what I wrote at that time is still worth keeping in mind: “Markets can be overheated without nearing a meltdown. Stocks can be pricey without being on a precipice.”
