The Trouble with Surging Prices: U.S. Investors Hotly Debate “Is This a Repeat of 1999?”

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As the market surges, the debate over bubbles quietly heats up.

Tony Pasquariello, head of Goldman Sachs’ hedge fund business, recently admitted the current trading environment is “almost intoxicating,” and bluntly stated he’s spent the entire week repeatedly comparing today’s market to the late 1990s.

This view coincides with the latest warning from Michael Burry, the inspiration for "The Big Short"—Burry wrote on social media, the current market “feels like the last few months of the 1999-2000 bubble.”

Two market participants from different perspectives both invoke the same period in history, reflecting a common underlying concern among investors: This AI-driven bull market— is it a historic industrial revolution, or just a frenzy approaching its finale?

Burry's warning directly targets the market’s structural distortion. He points out that the stock market no longer responds rationally to economic data like jobs reports or consumer confidence: "Stocks are rising not because of employment or consumer sentiment, but simply because they keep rising—based on a narrative that everyone thinks they understand, two letters (AI)."

Meanwhile, hedge fund legend Paul Tudor Jones also stated the current environment is highly similar to 1999. He believes the bull market may have one to two years of runway left, but if valuations continue to inflate, the eventual correction will be “suffocating.”

This debate quickly spread to social platforms, with bulls and bears each making their case and engaging in fierce debates over the essence of the AI rally, providing the truest reflection of recent market sentiment.

Goldman Sachs’ “optimistic caution”: Feverish, but not yet totally out of control

The current market’s trading intensity has reached extremely high levels. Tony Pasquariello at Goldman Sachs describes it as “almost intoxicating.” He points out that this is by no means a prolonged stagnation; global AI concept stocks remain incredibly hot. The data shows the Philadelphia Semiconductor Index has risen on 24 out of the past 28 days, soaring 63% during this period.

This frenzy isn’t limited to the US; there’s a strong linkage effect in global markets. In South Korea, the KOSPI index achieved a 79% total return last year and is up another 79% this year; Samsung’s market cap has surpassed $1 trillion.

Expert Tim Moe expects South Korea's earnings to grow 300% this year, and the index may reach 9000 points.

Japan's stock market is also strong, with the NKY index up 25% this year on top of a 29% gain last year.

Faced with the S&P 500’s doubling since the end of 2022, Pasquariello admits that he keeps comparing today to the late 90s. After seven straight years of gains from 1991 to 1998, the Nasdaq 100 (NDX) doubled again in 1999.

He acknowledges clear signs of chasing momentum this week—S&P 500 call option volume hit a record high—but he believes the market hasn’t reached the “critical point of complete frenzy.” Using speculative positions at the 2021 market peak as the benchmark ("+10"), his current estimate is "+7".

Looking ahead, Pasquariello remains optimistic. He believes that with the super-cycle of AI capital expenditure, increased defense spending, and diversified supply chains, the market may be preparing for a period dominated by “re-inflation” trades.

Burry’s warning: Stocks are rising simply because they rise

Michael Burry’s latest statement comes via his Substack. He described listening to financial radio while driving long distance: "It was all AI, nobody was talking about anything else."

Burry directly compared the trajectory of the current SOX index to the tech stock crash before March 2000. His core judgment is:

The market has detached from fundamental anchors and entered a self-reinforcing logic—“stocks rise because they keep rising.”

He specifically points out that S&P 500 hit new highs on the day when April's payroll data slightly exceeded expectations, while consumer confidence simultaneously marked a historic low—a notable divergence.

Paul Tudor Jones’ view overlaps somewhat with Burry but is milder. Jones stated the current environment is similar to 1999, but he estimates the bull market may still continue for a year or two.

He also warned that if stocks rise another 40%, the ratio of stock market value to GDP will reach 300%-350%, and the resulting correction would be “suffocating.”

Social media debate: A battle over bubble definitions

Burry’s warning quickly sparked widespread discussion on social media, with bulls and bears fiercely debating “is this a bubble or not?”

Bears cite historical parallels with direct logic. Marcos Crypto listed three fatal bubble signals from 2000: Cisco was worshipped as "forever a buy" at a P/E of 196; companies could raise hundreds of millions just with user growth and a story, with almost no actual profits; retail investors rushed into a handful of star stocks until the Fed tightened liquidity. He believes all three signals have reappeared in 2026.

Geiger Capital points out in one chart that AI-related stocks currently account for about 40% of total market value.

User Helene Meisler puts it bluntly: "If you didn't experience 1999-2000, you're lucky—now you can experience it firsthand."

Bulls challenge the definition of "bubble" itself.

Citrini offers a stricter framework: The nature of a bubble is "the reflexive interaction between the mainstream trend and mainstream misinterpretation of that trend, both reinforcing each other until the gap between perception and reality becomes unsustainable." The real driver behind the rise in AI infrastructure is “we truly don’t have enough computing power”—a reality rather than fantasy about the future. Every earnings season, companies uniformly confirm supply is still insufficient.

His conclusion: To gauge the top of a bubble, what you need isn’t a valuation judgment, but a clearer answer to “what is the misinterpretation, and what negative catalyst will force the market to recognize reality?”

Quantitative analyst Quantian offers “napkin math”: classify AI-related sectors by labs, hyperscale cloud, chips, memory, compute, etc., and compare post-ChatGPT basket valuation increases with long-term EBITDA forecasts, to judge if the premium is reasonable.

Core of the debate: Will history repeat, or is this time different?

The deep tension of this debate lies in the opposing interpretations of the same history.

Bears believe the internet in 1999 and AI in 2026 are highly similar in market behavior: narrative-driven, valuations unanchored, retail chasing momentum, media bombarding with a single theme all day.Bulls insist AI’s capital spending needs are real and verifiable, fundamentally different from the internet era firms burning cash with no business model.

Pasquariello’s report also touches on this divide. He quotes clients saying AI infrastructure should be larger and longer-lasting than the internet; but he also acknowledges it’s worth seriously questioning whether some market moves already reflect “excess speculation.”

This debate currently has no conclusion. One thing is certain: when the head of Goldman’s hedge fund division, “The Big Short” prototype, and a hedge fund legend all reference 1999 as a benchmark, the market’s anxiety about its position needs no further annotation.

Risk warning and disclaimerThe market involves risk, so invest cautiously. This article does not constitute personal investment advice or consider the individual investment objectives, financial status, or needs of specific users. Readers should consider whether any opinions, views, or conclusions expressed suit their particular situation. Investing based on this is at your own risk. ```