Thread by @bravosresearch

Tech has doubled since October 2022

Between 1995 and 1999, Tech doubled every 2 years

Are we following the same footsteps of the Dot Com bubble?

A thread 🧵

2/ Between 1995 and 1999, the NASDAQ 100, the US tech stock index, 2x in price every 2 years

Returns like that seem absurd, but here’s the thing:

The Nasdaq 100 has delivered similar returns recently

3/ Since bottoming in late 2022, the Nasdaq 100 has 2x in price again

4/ If you overlay the late-1990s price action onto the last 2 years, they are actually quite a close match

The key difference?

In the late ‘90s, the Nasdaq 100 sustained gains for multiple years

Could we be on the verge of another multi-year melt-up today?

5/ In the 1990s, the tech boom was fueled by optimism about the internet

Today, AI is driving similar enthusiasm

It’s a theme that feels just as revolutionary

6/ On valuations, the Nasdaq 100 is about as expensive today as it was in October 1998

Which was loser to the end of the Dot-com boom than the beginning

But from that point, the Nasdaq 100 still climbed another 234% before peaking

7/ We can see that on this chart that shows us what's called the PE ratio of the NASDAQ 100

This is a way for us to gauge how expensive this index is at any given point in time

The Nasdaq 100’s current PE ratio is 30

Which were levels we last saw during the Dot-com mania of the late ‘90s

8/ In fact, when you compare Nasdaq 100’s PE ratio to the rest of the US stock market using the S&P 500’s PE ratio, you see a similar gap like the late 1990s

9/ This valuation gap is why many experts are bearish on tech

But back in the ‘90s, the gap grew much larger

When viral narratives like the internet—or AI—take hold, there’s no telling how much further this can stretch

To maximize opportunities in such markets and get real-time Trade Alerts visit:

bit.ly/BravosResearch

10/ It can be dangerous when the market begins to get too complacent like this though

Prices can diverge from fundamentals in what’s call a ‘Bubble’

These bubbles are often fueled by viral narratives

And AI optimism in tech today is starting to feel similar

11/ Take this chart for example that shows long-term earnings expectations for tech stocks

It’s basically how high the earnings expectations of Wall Street analysts are on technology stocks looking out 5 years

12/ In the late ‘90s, analysts predicted 30% annual growth for tech - a massive number

For context, that’s growth markets rarely achieve in even a single year

After the bubble burst though, expectations dropped to more realistic levels of around 13%

13/ Today, analysts expect 25% annual growth for tech over the next 5 years

Again, this is quite high, and in our view, it’s unlikely to materialize

14/ So yes, tech may be disconnecting from fundamentals

But as George Soros famously said: “When I see a bubble forming, I rush in to buy, adding fuel to the fire”

If you can't fight it, join it

15/ Here’s why the argument for tech still holds:

The Nasdaq 100 has outperformed the S&P 500 by over 400% since its inception

Since 2002 alone, tech has beaten the broader market by 230%

16/ That said, recent performance hasn’t been as impressive

Tech surged in early 2023 after ChatGPT triggered the AI optimism

But since June 2023, tech’s performance has stagnated against the market

17/ To some, this stagnation signals a topping process

Indicating that tech stocks are ready to collapse under their own weight and revert to reality

18/ But to others, this is the tech sector setting up a base to move up higher and continue its euphoric performance

19/ A similar thing happened in 1999:

After a huge run in late-1998, tech consolidated for almost a year before resuming its uptrend into 2000

20/ This is what we’ve communicated to our clients

We’ve been neutral on tech since 2023

But recent moves suggest tech may be gearing up to outperform again

Get access to 3 weekly Investment Strategy videos at:

bit.ly/BravosResearch

21/ If you look at this chart with moving averages of the Nasdaq 100 relative to the S&P 500, you’ll see:

They’ve clustered tightly over the last few months as tech formed a base

This clustering is technically a bullish signal, especially after the breakout we just saw

22/ At Bravos Research, we’ve flipped bullish on tech stocks

We’re actively scanning for long trades in the sector

And already have trades on names like Amazon, which are up over 15%

23/ But we’re staying flexible

If this ratio falls back below key moving averages, it’ll be a red flag

Flexibility is the cornerstone of our strategy at Bravos Research

24/ In 2024, we’ve done 104 trades:

68 wins, 36 losses

You can check our track record for FREE on our website

If you want to be on top of markets in 2025, try our service at:

bit.ly/BravosResearch

25/ Thanks for reading!

If you enjoyed this thread, please ❤️ and 🔁 the first tweet below

And follow @bravosresearch for more market insights, finance and investment strategies

https://x.com/bravosresearch/status/1870880805800562849