Despite an ongoing pandemic and the U.S. economy barely limping along, the Nasdaq is still trading more than 50% above its March lows. The surge in tech stocks in 2020 has understandably led investors to draw comparisons to the dot-com bubble in 2000.
The Nasdaq ultimately peaked at 5,048.62 on March 10, 2000. Of course, some dot-com bubble stocks have performed much better than others in the 20 years since the bubble burst.
FANG Stocks Of Dot Com Bubble: Today’s investors are very familiar with the FANG stocks, Facebook, Inc. (NASDAQ: FB), Amazon.com, Inc. (NASDAQ: AMZN), Netflix, Inc. (NASDAQ: NFLX) and Alphabet, Inc. (NASDAQ: GOOGL) (NASDAQ: GOOGL). These four stocks both led the bull market since the 2008 financial crisis and dominate today’s market with their massive market caps.
The dot-com had its own growth of FANG-esque stocks that dominated the tech sector back in 2000:
Microsoft Corporation (NASDAQ: MSFT) reached a dot-com bubble peak market cap of $561 billion back in March 2000.
Cisco Systems, Inc. (NASDAQ: CSCO) reached a peak market cap of $555.4 billion.
Intel Corporation (NASDAQ: INTC) peaked at a $509 billion market cap in August 2000.
Oracle Corporation (NYSE: ORCL) had its dot com market cap top out at $245 billion in March 2000.
Finally, IBM (NYSE: IBM) had a peak dot com-era market cap of $215 billion.
Altogether, these five tech stocks had a peak combined dot com market cap of more than $2.08 trillion, but that valuation certainly didn’t last for long.
Dot-Com Bubble Fallout: A year after the Nasdaq peaked in March 2000, the Nasdaq was down 59.3%. All five of these big tech stocks had taken a hit. IBM was the most resilient of the group, declining just 5.4%. Microsoft shares were down 43.8%, Intel shares were down 51%, Oracle shares were down 59.8% and Cisco shares were down 69.7%.
By March 10, 2010, the Nasdaq was still down 53.2% from its dot-com bubble peak a decade later. IBM was the only stock that had generated decent returns, gaining 19.5% overall during that 10-year stretch. Oracle shares were down 39%, Microsoft shares were down 42.6%, Cisco shares were down 62% and Intel shares were down 64.7% during the first decade following the dot com bubble peak.
20 Years Later: Fortunately for investors, the last 10 years has been a much better decade for tech stocks than the previous 10 years. Thanks in large part to the FANG stocks, the Nasdaq is now up 120.4% from its dot-com bubble peak.
Some of the five big tech stocks mentioned above have recovered to perform well overall 20 years after the dot com bubble. Others have not. Here’s a look at how much buying $1,000 in each stock on March 10, 2000 would be worth today, assuming reinvested dividends:
Overall, a $5,000 investment in these five stocks split evenly during the dot-com bubble peak would be worth $11,976 today, a 139.5% gain over a 20-year period.
Benzinga’s Take: Four out of the five big tech stocks of the dot com era have lagged the 120.5% overall gain by the Nasdaq over the last 20 years. In addition, Microsoft is the only stock of the five that beat the 252% total return of the S&P 500 ETF Trust (NYSE: SPY) since March of 2000.
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