Reference to the US Internet bubble in 1999, should we worry about today's AI technology stocks?
In 1998/1999, the bull market in the US stock market was due to the technology stock bubble at that time. In 1998, the return rate of the computer sector was 77.6%, while the rise of the S&P 500 index was still as high as 26.7%.
When market investors are murmuring about the possible bubble in US stocks, they can take a look at to what extent the rebound of the S&P 500 index in 2023 is driven by the surge of technology stocks, which may make some people feel more uneasy.
Jim Reid, a strategist at Deutsche Bank, said in a report last Friday: "Interestingly, this sustained frenzy in technology stocks has led to the weakest rebound in the US stock market this century."
As shown in the chart above Deutsche Bank, as of Thursday, the S&P 500 index rose 8.1% in 2023 under the leadership of technology stocks, while the S&P 500 equal-weighted index fell 1.2%, outperforming by 9.3 percentage points.
This will be the largest gap since 1999 and 1998, when it was 9.3% and 16.3%, respectively.
As we all know, the bull market in US stocks in 1998/99 was due to the technology stock bubble at that time. In 1998, the return rate of the computer sector was 77.6%, while the rise of the S&P 500 index was still as high as 26.7%.
At the same time, analysts warn that the short-term surge in technology stocks driven by artificial intelligence may continue.