It was March 24, 2000. Exactly 25 years ago today the graphs tell us that theS&P 500 index recorded a record high that it would not see again until 2007. Three days later, the index also Nasdaq xnumx, a tech heavyweight, closed at an all-time high, the last time it would do so for more than 15 years. Five years earlier, a revolutionary new technology had arrived, called Internet, Which has enchanted investors around the world for its seemingly limitless possibilities. The euphoria unleashed a rally of the stock market to stellar levels. Then everything collapsed. It was the outbreak of the dot-com bubble leaving behind a trail of investment losses for trillions of dollars.
Celebrating each anniversary has a specific purpose: to take stock, make comparisons and imagine the developments. Reading the history of 25 years ago, the parallels with the present there are not a few: the enchanting nymph of the markets who was then called Internet, today it's called Artificial intelligence, but the rally was there today as then. And now that a descent is taking place, strategists are wondering: are we on the threshold of a similar collapse to that of the dot-com or is it a simple fix?
There are two elements to keep in mind today, very different from those of that time. The first is that starting this January, the market Usa he had to share with other financial centers his scepter: on the stage, quite unexpectedly, appeared the Chinese and European actors, until then ignored by investors. Instead, the arrival in China of DeepSeek which promises low-cost artificial intelligence and the elimination of Germany of a second wall, that of the debt ceiling they triggered portfolio allocation adjustments: without necessarily bringing up the idea of panic attacks, but simply for the sacred dogma of portfolio diversification, the good investor's manual suggested a US relief, taking a lot of benefits, for make room for the other two, like i strategists are indicating.
Il second factor what makes the current situation different from that of 25 years ago is underlying: today's is more solid than that of then, with real profits of companies and a stronger US economy. That said, in these things there are no crystal balls to consult. But data certainly do.
The rally 25 years ago
The peaks recorded around March 24, 25 years ago marked the end of a crazy ride that began with the enormous initial public offering for Netscape Communications Corp, which went public in August 1995. Between then and March 2000, the S&P 500 nearly tripled, while the Nasdaq 100 rose 718%. And then it was over. By October 2002, more than 80% of the Nasdaq's value had disappeared, and the S&P 500 was essentially cut in half in the roughly $5 trillion dot-com crash.
The rally of these years and the correction
The echoes of that era resonate now. Technology this time is theartificial intelligence. After a wild stock market rally that sent the stock market soaring the S&P 500 72% from its low in October 2022 to its peak last month, adding more than $22 trillion in market value in the process, signs of trouble are emerging. Stocks are starting to fall, with the Nasdaq 100 losing more than 10% to a “correction” level and the S&P 500 briefly falling to that level as well. In Wall Street lingo, correction occurs when stocks fall more than 10% from their recent high. Losses greater than 20% constitute a bear market. The U.S. market index reached its latest intraday high on February 19. By the close on Thursday, March 13, it had already fallen 10,45% from that record. The recent plunge comes after more than two years of strong gains in the U.S. market, driven largely by large-cap technology stocks and the artificial intelligence boom. Over the past 12 months, the U.S. market index had returned 8,9% through Wednesday, March 12). Since the start of 2023, stocks have risen nearly 50%.
Over time, a confluence of factors ended the dot-com bubble. The Federal Reserve began raising interest rates aggressively, in part to slow stock market exuberance. Meanwhile, the Japan sank into a recession, which raised fears of a global slowdown.
AI companies are different from dot-coms
The risk for investors today is that that scenario could repeat itself. Theartificial intelligence inspires dreams of computerized personal assistants woven into every aspect of our lives. The new technology will manage our transportation, help teach our children, provide routine medical care, create entertainment, and handle everyday errands and household chores.
Bad companies involved in AI boom are very different from the companies that dominated the era of dot-comThe Internet bubble was largely built on companies unprofitable startups, some of which have capitalized on the trend by simply adding a “.com” to their names, so they can easily sell shares to the public.
Of course. The hype surrounding AI is concentrated on a small group of technology companies that are among the most profitable and financially stable in the world, such as A, Amazon.on, Apple, MetaPlatforms, ecosystem e Nvidia. But look at the amount of capital being generated by today's tech giants. This year alone, Alphabet, Amazon, Meta and Microsoft are expected to invest a combined $300 billion in capital expenditures to develop their AI capabilities, according to analyst estimates compiled by Bloomberg. And even with all that spending, it is still expected to generate $234 billion in combined free cash flow.
Il The dot-com boom was nothing like it, as it was more about speculative investments in emerging companies that they did not generate profits.
Furthermore the concept of evaluation of share prices according to p/e ratios was even snubbed, so much so that Wall Street even invented new metrics, such as “mouse clicks” and “eyeballs,” to try to measure their growth without involving money. Although it may seem crazy now, many investors at the time did not pay attention because they were betting on a limitless future.
Technical evaluations
So, should we be afraid or not? Now, not having a crystal ball, some data comes to our aid.
The analysis conducted by the independent company Ned Davis, based on historical data from 1928 to 2024, shows the average performance of the equally weighted S&P 500, taking into account annual performance, the dynamics of the first year of each presidential cycle and the fifth year of each decade. If this trend were to repeat itself in 2025, the correction recorded since the beginning of March could fall within the normal seasonality of the index, which historically moves sideways or slightly down between March and April, before resuming growth. The analysis suggests that the S&P 500 could close the year with a increase of around 10%.
Javier Molina, Senior Market Analyst at eToro brings another piece of data. “Despite the bearish tone, investment flows tell a different story. In the midst of the correction, the Equity ETFs they recorded net inflows for $57 billion, the highest weekly figure in 2025, demonstrating that, once again, the dip is being bought,” notes the eToro analyst. “This leads us to ask whether this is simply a technical correction or the start of a bear market. Since 1929, there have been 30 corrections of 10% or more, but only 16 have led to a bear market,” says Molina. “Risk appetite indicators today do not indicate a clear opportunity to buy against the grain: there are no signs of panic, but there is a clear erosion of market sentiment,” he adds.
We must then take into account the upward revision of the earnings per share estimates of S&P 500 companies over the past six months, with annualized EPS growth accelerating significantly over the past five years. Additionally, the index's return on equity remains at historically high levels.
