"In the late 1990s, most of the leading IT infrastructure companies were seeing growth on two fronts, the scramble to fix legacy systems to be able to handle the date change as well as providing the demand for resources for the new e-commerce era," he continued. "The dotcom bust of 2000-2001 was a unique event that was accompanied, coincidentally, with the aftermath of the build-up to Y2K," McKendrick explained to Newsweek. Still, despite similarities between the events, there were some key differences, technology analysts said. The mania surrounding crypto was palpable that year-with celebrities endorsing projects and initial coin offerings teasing riches for early investors, before fizzling into thin air. During that year, the value of digital money Bitcoin spiked from below $1,000 to nearly $20,000 in just 12 months, before eventually crashing amid a mass sell-off. The meteoric rise in the value of cryptocurrencies in 2017 provides a more recent example of how all bubbles eventually burst. "But tech companies are much more resilient than they were 20 years ago." "Yes, there are still new players coming into the scene with inflated valuations, lately we've seen that with artificial intelligence and fintech," technology industry analyst Joe McKendrick told Newsweek. That was a level not seen since 2000, Markets Insider reported. Last month, Goldman Sachs analysts said in a financial note that the S&P 500 index concentration in the top tech companies-Facebook, Amazon, Apple, Microsoft, and Alphabet- was the greatest it has been in 20 years.
CNBC reported the top five tech giants lost more than $320 billion of value as a result.įears around the ongoing novel coronavirus outbreak have helped to fuel the downturn, as tech industry staffers are now being told to work from home to limit the spread of the disease. stock market suffered one of its biggest plunges since the 2008 financial crash, albeit for very different reasons. The 20 year anniversary of the dotcom bubble implosion this week came as the U.S. That economy may not be as susceptible to bursting in spectacular fashion as seen in the past, but this week it was made clear that it can certainly take a punch. Gownder said the top tech firms' business models are not as prone to bubbles as they are "based in reality" but warned that doesn't mean they are "impervious to the broader economy." Facebook and Google have consumer networking and search." "Many of today's technology firms have attained a level of maturity that almost no dotcom companies had: Microsoft and Amazon have huge cloud computing businesses, which the rest of the business world runs on. " a bubble that took a real, transformational phenomenon-the internet-and compressed its potential for economic value into an unrealistic time frame-a couple of years. market research company Forrester, told Newsweek. Gownder, vice president and principal analyst at U.S. "The dotcom recession was caused by irrational exuberance," J.P. Yet while top companies are not expected to tumble out of existence overnight, those without a solid financial footing-and a real reason to exist-could easily find themselves in trouble. There is little doubt the web is central to modern life, but could another major crash ever happen?Įxperts told Newsweek the world is a very different place than it was in the late 90s, and the well-established tech firms are unlikely to face the same pitfalls as their digital ancestors. In 2020, the tech space is burgeoning, but crowded. Others from the era, notably Amazon and eBay, managed to cling on. By October 2002 the market had lost more than 75 percent of its value.ĭotcom businesses once listed as potential cash cows, like, Kozmo or eToys, imploded. Loose wallets and the desire to grow startups extremely fast helped to fuel the boom, pushing the Nasdaq to an all-time high of 5132.52 on March 10, 2000.īut the good times were not to last. Read more 'Valley of the Boom' Shows Zany Side of Silicon Valley