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Party Like it's 1999? Why the Nasdaq will Double from Here
Key Takeaways
The 2025 Wall Street narrative has shifted dramatically from panic to bubble fears.
Legendary investor Paul Tudor Jones made headlines when he compared the 2025 market to 1999.
A rate cut with stocks at highs, muted sentiment, and further AI expansion suggest a market with legs.
2025 is a prime example of how dynamic the Wall Street narrative can be and how price action can change that narrative. A mere six months ago, Wall Street was in panic mode as President Trump unveiled his ‘Liberation Day’ tariff policy, an economic strategy an American President had not attempted in a century. At the time, many Wall Street investors viewed President Trump’s tariffs as economic suicide, with some even predicting that another “Black Monday” would occur (referring to the day the S&P 500 Index dropped 20% in a single day on October 19, 1987).
Fast forward to the present day, and the Nasdaq Composite is up 50% over the past six months, driven by AI enthusiasm. Today, the Wall Street narrative has done a 180-degree turn from market crash fears to market bubble fears. Let’s use the internet bubble as a potential precedent to explore the current market environment and determine where we stand:
Paul Tudor Jones 1999 Bombshell Comparison
In a recent interview on CNBC’s ‘Squawk Box,’ billionaire and legendary investor Paul Tudor Jones dropped a bombshell, saying that the current market “feels exactly like 1999” and that “investors need to position themselves like it’s October 1999.” If Paul Tudor Jones’ analysis is correct, there is plenty of meat left on the bone for tech investors as the Nasdaq doubled from 1999 to 2000. Not only does Tudor Jones see the 2025 market similar to 1999, but he also believes the current market may end up being more powerful.
Image Source: TradingView
The 1999/2025 Market Precedent
Paul Tudor Jones is no stranger to using market precedents to make bold market predictions. In 1987, he famously predicted the “Black Monday” crash by utilizing an overlay chart that compared the 1987 market to 1929. After shorting the market, a young Paul Tudor Jones and his firm returned 125% in 1987, netting approximately $100 million. Overlay a 1999 and 2025 chart, and the price action looks eerily similar.
Image Source: BarChart
Meanwhile, the current bull market (which started after the tariff madness dissipated) is only a handful of months old. Historically, the average bull market is ~4 years.
Interest Rate Cuts at New Highs = Rocket Fuel
Beyond the hype surrounding AI, the Federal Reserve is adding fuel to the fire. At the last Fed meeting, Chair Jerome Powell cut interest rates as the S&P 500 reached a new high. The Federal Reserve has cut interest rates 12 times when the S&P 500 Index was within 1% of its all-time high. The market was higher one year later all 12 times, with a median return of 15%, according to JPMorgan ((JPM - Free Report) ) research.
Until now, most AI performance has been concentrated among semiconductor players like Advanced Micro Devices ((AMD - Free Report) ), infrastructure providers like CoreWeave ((CRWV - Free Report) ), and data center energy companies like Bloom Energy ((BE - Free Report) ). However, AI winners are beginning to proliferate from pure-play stocks into other tech areas, such as software stocks. For instance, Figma ((FIG - Free Report) ) and Shopify ((SHOP - Free Report) ) are rising this week after signing deals with OpenAI, the parent company of ChatGPT. The FIG/OpenAI integration will enable users to design tasks with ChatGPT conversations. Meanwhile, SHOP’s partnership will allow ChatGPT users to bypass the traditional e-commerce journey and purchase products straight from the LLM. This collaboration positions Shopify merchants to reach a vast new audience and capitalize on the growing field of conversational commerce.
Animal Spirits Yes, Euphoria No
Any time stocks are up 50% in six months, it’s hard for investors to argue that the animal spirits have been unleashed. Nevertheless, several data points suggest that the current market is far from euphoric. For instance, according to the AAII Sentiment Survey, investor sentiment is not overheated. Bullish sentiment stands at 42.9%, neutral sentiment at 17.9%, and bearish sentiment remains elevated at 39.2%.
Image Source: AAII
Additionally, there is a substantial amount of “dry powder” on the sidelines, with a record $7 trillion in low-risk money market funds. As stocks continue to rise, investors are likely to suffer from “the fear of missing out,” eventually removing funds from these safe havens and into the stock market, adding fuel to the fire.
Valuations are High but Likely to Stretch Higher
A key concern among investors is that 2025 valuations are too rich. While the S&P’s current P/E ratio of 23x is elevated compared to historical norms, it pales in comparison to the 2000 peak, which exceeded 40x. Investors must understand that Wall Street is willing to pay higher valuations for high-tech, innovative companies like the current AI leaders.
Image Source: Robert Shiller
Bottom Line
The 2025 bull market is unusually bullish. Although stocks experienced a tremendous run since the ‘Liberation Day’ lows, several key data points suggest that the Nasdaq could still double from here.
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Party Like it's 1999? Why the Nasdaq will Double from Here
Key Takeaways
2025 is a prime example of how dynamic the Wall Street narrative can be and how price action can change that narrative. A mere six months ago, Wall Street was in panic mode as President Trump unveiled his ‘Liberation Day’ tariff policy, an economic strategy an American President had not attempted in a century. At the time, many Wall Street investors viewed President Trump’s tariffs as economic suicide, with some even predicting that another “Black Monday” would occur (referring to the day the S&P 500 Index dropped 20% in a single day on October 19, 1987).
Fast forward to the present day, and the Nasdaq Composite is up 50% over the past six months, driven by AI enthusiasm. Today, the Wall Street narrative has done a 180-degree turn from market crash fears to market bubble fears. Let’s use the internet bubble as a potential precedent to explore the current market environment and determine where we stand:
Paul Tudor Jones 1999 Bombshell Comparison
In a recent interview on CNBC’s ‘Squawk Box,’ billionaire and legendary investor Paul Tudor Jones dropped a bombshell, saying that the current market “feels exactly like 1999” and that “investors need to position themselves like it’s October 1999.” If Paul Tudor Jones’ analysis is correct, there is plenty of meat left on the bone for tech investors as the Nasdaq doubled from 1999 to 2000. Not only does Tudor Jones see the 2025 market similar to 1999, but he also believes the current market may end up being more powerful.
Image Source: TradingView
The 1999/2025 Market Precedent
Paul Tudor Jones is no stranger to using market precedents to make bold market predictions. In 1987, he famously predicted the “Black Monday” crash by utilizing an overlay chart that compared the 1987 market to 1929. After shorting the market, a young Paul Tudor Jones and his firm returned 125% in 1987, netting approximately $100 million. Overlay a 1999 and 2025 chart, and the price action looks eerily similar.
Image Source: BarChart
Meanwhile, the current bull market (which started after the tariff madness dissipated) is only a handful of months old. Historically, the average bull market is ~4 years.
Interest Rate Cuts at New Highs = Rocket Fuel
Beyond the hype surrounding AI, the Federal Reserve is adding fuel to the fire. At the last Fed meeting, Chair Jerome Powell cut interest rates as the S&P 500 reached a new high. The Federal Reserve has cut interest rates 12 times when the S&P 500 Index was within 1% of its all-time high. The market was higher one year later all 12 times, with a median return of 15%, according to JPMorgan ((JPM - Free Report) ) research.
Image Source: Carson Investment Research, @ryandetrick
AI: Beyond LLMs and into the Software Layer
Until now, most AI performance has been concentrated among semiconductor players like Advanced Micro Devices ((AMD - Free Report) ), infrastructure providers like CoreWeave ((CRWV - Free Report) ), and data center energy companies like Bloom Energy ((BE - Free Report) ). However, AI winners are beginning to proliferate from pure-play stocks into other tech areas, such as software stocks. For instance, Figma ((FIG - Free Report) ) and Shopify ((SHOP - Free Report) ) are rising this week after signing deals with OpenAI, the parent company of ChatGPT. The FIG/OpenAI integration will enable users to design tasks with ChatGPT conversations. Meanwhile, SHOP’s partnership will allow ChatGPT users to bypass the traditional e-commerce journey and purchase products straight from the LLM. This collaboration positions Shopify merchants to reach a vast new audience and capitalize on the growing field of conversational commerce.
Animal Spirits Yes, Euphoria No
Any time stocks are up 50% in six months, it’s hard for investors to argue that the animal spirits have been unleashed. Nevertheless, several data points suggest that the current market is far from euphoric. For instance, according to the AAII Sentiment Survey, investor sentiment is not overheated. Bullish sentiment stands at 42.9%, neutral sentiment at 17.9%, and bearish sentiment remains elevated at 39.2%.
Image Source: AAII
Additionally, there is a substantial amount of “dry powder” on the sidelines, with a record $7 trillion in low-risk money market funds. As stocks continue to rise, investors are likely to suffer from “the fear of missing out,” eventually removing funds from these safe havens and into the stock market, adding fuel to the fire.
Valuations are High but Likely to Stretch Higher
A key concern among investors is that 2025 valuations are too rich. While the S&P’s current P/E ratio of 23x is elevated compared to historical norms, it pales in comparison to the 2000 peak, which exceeded 40x. Investors must understand that Wall Street is willing to pay higher valuations for high-tech, innovative companies like the current AI leaders.
Image Source: Robert Shiller
Bottom Line
The 2025 bull market is unusually bullish. Although stocks experienced a tremendous run since the ‘Liberation Day’ lows, several key data points suggest that the Nasdaq could still double from here.