Relive the feeling of the peak of the bubble? The current US stock market is rising even faster than it did in 1999!

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Under the dual catalyst of the artificial intelligence boom and improved macro environment, the US stock market is experiencing an extreme rally, with leading tech stocks’ gains even surpassing the peak levels before the burst of the internet bubble in 1999.

On May 7, Bloomberg macro strategist Cameron Crise wrote that as signs of easing appear in the Middle East conflicts, international oil prices have fallen sharply, dragging bond yields lower. Meanwhile, expectations for further Fed tightening this year have essentially faded away, and chip stocks represented by AMD have delivered outstanding results. The current stock market environment can be described as "perfect."

However, the article points out that such "unbelievably good" market performance is raising investors' alertness. According to Jonathan Krinsky, chief technical analyst at BTIG, the top 10 Nasdaq 100 (NDX) stocks over the past year have averaged gains of 784%, which not only beats the 1999 average, but also exceeds the performance in the year leading up to the market peak in March 2000.

This means the current round of tech stock rallies has officially surpassed the most famous bubble era in terms of gain intensity. Although the current macroeconomic fundamentals are far superior to those during the internet bubble, analysts warn that the level of market excitement is cause for concern: stocks often peak amid good news, and some analysts warn the semiconductor sector may be set for a stage top, with the market facing a 25% to 30% correction risk.

Leading Tech Stock Gains Surpass Internet Bubble Era

The extreme rally in the semiconductor sector is the absolute core of this bull run. Jonathan Krinsky from BTIG noted in his report, using historical data, that the current market’s concentrated outburst is even more extreme than during the internet bubble in some respects.

Data shows that in 1999, the top 10 performing stocks in the Nasdaq 100 had an average gain of 559%, and in the year before the peak on March 24, 2000, the average gain was 622%. By comparison, in the past year, the average gain of the top 10 Nasdaq 100 components reached a staggering 784%.

From individual stock performance, this trend of surpassing history is even more pronounced. In 1999, the best-performing Nasdaq 100 stock was Qualcomm, with a gain of 2600%; in the year before the internet bubble peaked, the best performer was Strategy, up 1260%.

Looking at the present, the best-performing Nasdaq 100 component stock in the past year was SanDisk, up 3960%. This result is 1300 basis points higher than Qualcomm's best 52-week rolling return during the entire internet bubble period. Interestingly, in 1999, SanDisk was the second-best performing stock, with a gain of 581%.

It’s worth noting that as the engine of this rally, the Philadelphia Semiconductor Index (SOX) is also approaching historical extremes.

During the internet bubble, the best 52-week rolling return for the index was 264%. Although the current 145% rolling return has not broken the historical record, it is the closest to that peak in the past 26 years.

Within the semiconductor sector, the gains in subfields are equally astonishing. Data center-related stocks are up 230%, while storage chip stocks have surged more than 450%.

Good News Stacking Up—Possible Market Peak Signal

The current US stock market seems to be in the most perfect possible state.

The article points out that from a macro perspective, the cooling of geopolitical risks has directly and positively impacted asset pricing. The easing situation in the Middle East has pushed oil prices down, thereby lowering bond yields and supporting stock market valuations.

In terms of liquidity expectations, market concerns about further Fed tightening have rapidly dissipated. On the corporate earnings side, AI-driven performance dividends are coming to fruition, and chip giants such as AMD have further fueled bullish sentiment.

Cameron Crise said this perfect resonance at both macro and micro levels makes skeptical investors feel a chill down their spine.

Unlike the period from 2000 to 2002 when the internet bubble burst without fundamental support—resulting in an 84% collapse in the semiconductor index—the current market fundamentals are clearly more robust. Analysts believe the likelihood of a repeat of such a devastating decline is low.

However, this doesn’t mean the market is immune to cyclical adjustments. BTIG expects the semiconductor sector may see a 25% to 30% correction, which would bring the Philadelphia Semiconductor Index back near its 50-day moving average.

Analysis points out that historical experience shows stocks often peak amid good news. Currently, strong earnings data and positive news from the Middle East are interweaving, possibly building a cyclical high for the semiconductor sector.

Risk Disclosure and DisclaimerThe market has risks, and investments should be made cautiously. This article does not constitute personal investment advice and does not take into account users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their own circumstances. You are responsible for any investment decision made accordingly. ```