We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The current AI buildout mirrors the late 1990s internet boom.
Paul Tudor Jones proved that pattern recognition and fundamental conviction are critical.
Accelerating EPS across technology provides the foundational conviction required to hold leading stocks.
Stock Market History Doesn’t Repeat Itself but it Often Rhymes
The now-infamous 1987 documentary “Trader” documents a young, up-and-coming hedge fund manager’s hectic, day-to-day life. That trader’s name was Paul Tudor Jones. In the real-life documentary, Jones and his partner Peter Borish are astonished when they discover that a price chart of the late 1920s stock market mirrored the 1980s stock market. The rest is history. Paul Tudor Jones plowed into a sizable market short position and would clear in estimated $100 million when the Dow Jones Industrial Average plummeted 22.60% on “Black Monday” (October 19th, 1987).
Image Source: TradingView
Many new traders are surprised when they learn that Paul Tudor Jones made his Black Monday fortune not by using an overly complex analysis but instead by through technical analysis, pattern recognition, and conviction.
Pattern recognition is one of the most valuable tools a trader can have in their toolbox. Which brings me to this: the current AI buildout is closely mirroring the internet boom of the late 1990s. Both cycles occurred with a major technological breakthrough. In late 1994, Netscape released its first web browser. Meanwhile, in November 2022, OpenAI launched ChatGPT. Now for the shocking part.
Through roughly 1,000 days, the Nasdaq’s return is almost identical to the return the Nasdaq enjoyed in the 1,000 days following Netscape’s first browser launch. What’s even more staggering is that, in each instance, a major fund suffered significant losses, leading to a temporary market pullback before a raging bull market. In 1998 it was Long Term Capital Management, and in 2026 it was Situational Awareness. If the precedent is to continue to hold, it suggests that AI stocks have a lot more meat on the bone and are likely in the early innings of a generational bull market.
Image Source: Bespoke Investment Group
The AI Bull Market: More than Technical Speculation
In a prophetic 1997 interview, Jeff Bezos recalled the precise moment he discovered the statistic that compelled him to leave his Wall Street job and start Amazon:
“I came across this startling statistic that web usage was growing at 2,300% a year. I’d never seen or head of anything that grew that fast.”
Although technical analysis can provide a valuable roadmap for traders, fundamental conviction is the only thing that can provide the necessary conviction to hold for the duration of a move. Contrary to the opinions of many Wall Street pundits, earnings growth in leading AI stocks is accelerating rapidly. For instance, Zacks Consensus Analyst Estimates suggest that, SanDisk ((SNDK - Free Report) ), the leading flash memory provider, will grow earnings at a staggering 3,689.34% next quarter.
Image Source: Zacks Investment Research
Bottom Line
The AI cycle continues to echo the monumental trajectory of the late 19990s internet boom. History suggests that temporary market pullbacks and high-profile fund corrections are merely chapters in a much larger story.
View the Zacks #1 Rank List
Image: Shutterstock
Tech Stocks: Echoes of 1998
Key Takeaways
Stock Market History Doesn’t Repeat Itself but it Often Rhymes
The now-infamous 1987 documentary “Trader” documents a young, up-and-coming hedge fund manager’s hectic, day-to-day life. That trader’s name was Paul Tudor Jones. In the real-life documentary, Jones and his partner Peter Borish are astonished when they discover that a price chart of the late 1920s stock market mirrored the 1980s stock market. The rest is history. Paul Tudor Jones plowed into a sizable market short position and would clear in estimated $100 million when the Dow Jones Industrial Average plummeted 22.60% on “Black Monday” (October 19th, 1987).
Image Source: TradingView
Many new traders are surprised when they learn that Paul Tudor Jones made his Black Monday fortune not by using an overly complex analysis but instead by through technical analysis, pattern recognition, and conviction.
Pattern recognition is one of the most valuable tools a trader can have in their toolbox. Which brings me to this: the current AI buildout is closely mirroring the internet boom of the late 1990s. Both cycles occurred with a major technological breakthrough. In late 1994, Netscape released its first web browser. Meanwhile, in November 2022, OpenAI launched ChatGPT. Now for the shocking part.
Through roughly 1,000 days, the Nasdaq’s return is almost identical to the return the Nasdaq enjoyed in the 1,000 days following Netscape’s first browser launch. What’s even more staggering is that, in each instance, a major fund suffered significant losses, leading to a temporary market pullback before a raging bull market. In 1998 it was Long Term Capital Management, and in 2026 it was Situational Awareness. If the precedent is to continue to hold, it suggests that AI stocks have a lot more meat on the bone and are likely in the early innings of a generational bull market.
Image Source: Bespoke Investment Group
The AI Bull Market: More than Technical Speculation
In a prophetic 1997 interview, Jeff Bezos recalled the precise moment he discovered the statistic that compelled him to leave his Wall Street job and start Amazon:
“I came across this startling statistic that web usage was growing at 2,300% a year. I’d never seen or head of anything that grew that fast.”
Although technical analysis can provide a valuable roadmap for traders, fundamental conviction is the only thing that can provide the necessary conviction to hold for the duration of a move. Contrary to the opinions of many Wall Street pundits, earnings growth in leading AI stocks is accelerating rapidly. For instance, Zacks Consensus Analyst Estimates suggest that, SanDisk ((SNDK - Free Report) ), the leading flash memory provider, will grow earnings at a staggering 3,689.34% next quarter.
Image Source: Zacks Investment Research
Bottom Line
The AI cycle continues to echo the monumental trajectory of the late 19990s internet boom. History suggests that temporary market pullbacks and high-profile fund corrections are merely chapters in a much larger story.