Computer and software stocks account for more than a fifth of the value of the S&P 500 – a near-15-year high. Strong revenues make a replay of the 2000 dot-com crash unlikely.
Why 2016 Invited Comparisons With 2000
Any time tech’s share of the stock market climbs, investors remember the dot-com bust. On March 10, 2000, the Nasdaq Composite hit 5,048.62, the high-water mark of the dot-com boom, as Wired later put it. By October 2002, the index had fallen 78% from that peak, and many internet companies that had gone public on little more than a story had disappeared.
The big difference in 2016 was where the gains were coming from. In the late 1990s, prices raced ahead of earnings, and many of the hottest companies had little or no profit. The tech leaders of 2016 were selling phones, ads and software to billions of people and booking real profits along the way.
What Bloomberg Found
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- “Tech is one of the only industries where earnings continue to expand.”
- “Gains are built on earnings, driven by demand for products such as Apple’s iPhone and Google’s web ads.” The S&P 500’s tech stocks are expected to expand profit by 2.8 percent in the third quarter.
- “Information technology accounted for about one-fifth of the S&P 500’s operating earnings in the 12 months through March, almost precisely its market weight.
Since 2015, investors have favored tech companies chasing revenues instead of user growth, which helps to differentiate today’s gains in the sector from the rally that ended with a crash in 2000.
“It’s healthy growth,” Bloomberg quoted Rich Weiss, a Los Angeles-based senior portfolio manager at American Century Investments, as saying. “I don’t believe we need to worry about a tech bubble here or in the near future.”
That last point, that tech’s share of earnings matched its share of the market’s value, was the heart of the argument. A sector is harder to call a bubble when it’s earning roughly the same slice of profits as it represents in the index.
What Happened Next
The S&P 500 is weighted by market value, so as the biggest companies grow, they take up a bigger slice of the index on their own. That’s exactly what happened next. Tech’s weight in the market didn’t stop at a fifth. As of August 2026, information technology made up about 37% of the S&P 500, according to sector data from the iShares Core S&P 500 ETF compiled on Wikipedia. That’s close to double the share that prompted bubble worries in 2016.
Much of that growth came from the boom in artificial intelligence. In 2025, Nvidia, which makes the chips used to train and run most AI models, became the first company to pass $4 trillion and then $5 trillion in market value. The same enthusiasm reached private markets: according to the PitchBook-NVCA Venture Monitor, AI companies accounted for 65.4% of U.S. venture deal value in 2025.
Seen from 2026, the 2016 view that tech’s rise was built on earnings rather than hype looks largely right. The companies at the top of the market kept growing their profits, and their share of the index grew with them.
The Bubble Question, Again
The size of today’s tech weighting means the debate the original article described hasn’t gone away. It has simply moved to AI. The questions are the same ones investors asked in 2016: are profits keeping pace with prices, and how much of the market depends on a small group of companies?
That’s the useful lesson from this comparison. A high share of the market isn’t a bubble on its own. What matters is whether earnings support the prices, and whether the growth is spread across many companies or riding on a few. For investors and founders alike, watching revenue and profit, not just valuation, is still the best way to tell the difference between a boom and a bubble.
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Survival. Revenues. Spending smart. #Cockroach logic is dominating #startup success ► https://t.co/4hDoLLc7Qf pic.twitter.com/jDRy8nwqD6
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The world’s economic map is being redrawn and #tech #startups are leading the charge ► https://t.co/tElTu0eFpp pic.twitter.com/rz7Pj8gzyE
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Frequently Asked Questions
How large a share of the S&P 500 did tech stocks reach in 2016?
Computer and software stocks accounted for more than a fifth of the value of the S&P 500 in 2016, a near-15-year high.
Why was a repeat of the dot-com crash considered unlikely in 2016?
Tech's gains were built on earnings, driven by products like Apple's iPhone and Google's web ads, and the sector's share of S&P 500 operating earnings almost exactly matched its share of the index.
How bad was the dot-com crash?
The Nasdaq Composite peaked at 5,048.62 on March 10, 2000, and by October 2002 it had fallen 78% from that peak.
How big is tech's share of the S&P 500 now?
As of August 2026, information technology made up about 37% of the S&P 500, close to double the share that prompted bubble worries in 2016.
What role has AI played in tech's growth since 2016?
In 2025 Nvidia became the first company to pass $4 trillion and then $5 trillion in market value, and AI companies accounted for 65.4% of U.S. venture deal value that year.