12/14/25
S&P 500: 6827
Nasdaq: 23,195
10 Year Treasury: 4.1%
David R. Snyder, CFA
Another big myth is that today is different than the late 1990’s because most of the late 1990’s tech companies were not profitable, unlike today. Everybody uses Pets.com as the proxy. That is not true. I kept my Value Line reports from 2000-2003, which featured 2250 individual equity reviews. Those are real time reports so there is no retroactive analysis or survivor bias. Of the 272 tech related equities covered by Value Line back in that period, 243 or 89.3% of them were profitable in the 1999-2000 period. Not only were they profitable but a vast majority of them were growing sales and earnings at an accelerated pace. They were the best performing stocks as well. The following are each Value Line tech subsector and in parenthesis are the number of companies profitable in the 1999-2000 period.
- Wireless equipment (12 of 15)
- Electronics (27 of 27)
- Semiconductor (37 of 38)
- Semi Equipment (14 of 14)
- Computer & Peripherals (27 of 29)
- Ecommerce (15 of 19)
- Foreign Electronics (8 of 8)
- Computer Software & Services (48 of 53)
- Telecom Services (11 of 18)
- Internet (8 of 15)
- Information Services (14 of 15)
Many of these companies did become unprofitable in the 2001-2003 period but up until 2000 they experienced surging sales and profits. So they were really just overvalued stocks in 2000 not profitless. 42% of Russell 2000 stocks are unprofitable today vs. only 24% in 2000. And many of the fiber-optic companies that were building out the internet were profitable such as AT&T (T 26), Sprint, Quest, and Verizon (VZ 42). Even MCI Worldcom initially reported big profits in 2000. The cable companies who also built out the fiber-optic networks were operating cash flow positive. Only the CLEC’s were mostly unprofitable and cash flow negative.
There are plenty of unprofitable companies today in sectors related to AI. C3.ai (AI 15), Applied Digital (APLD 31), Coreweave (CRWV 85), Nebius (NBIS 103), Super Micro (SMCI 33), Nuscale Power (23 SMR), and Oklo (OKLO 103) are just a few of the AI stocks that are not making money. And some of the hyperscalers will be cash flow negative next year.
Also it is another myth that breadth was so bad in the late 1990’s that nothing else appreciated. Merck (MRK 101), Citigroup (C 108), General Electric (GE 292), and Exxon (XOM 117) each outperformed the S&P 500 until the last few months of that bull market despite having nothing to do with the internet. These were four of the largest companies in the S&P 500 (4 of the top 10 S&P 500 market capitalizations in 2000).
Full Disclosure: I own several of the securities mentioned positively. None have been purchased within the last month. The opinions merely represent the opinion of the author as CIO of Journey 1 Advisors, LLC and intended to inform the readers about our investment philosophy and strategy. The contents of this report are based on sources believed to be reliable. It is not intended for circulation. It is not intended to offer investment advice, or to recommend the purchase or sale of any securities or investment product. Investment advice is only given after a client has signed an investment advisory agreement with Journey 1 Advisors, LLC and will be subject to the terms and conditions therein. Your decision to buy or sell a security should be based upon your personal investment objectives and should be made only after evaluating the stock’s expected performance and risk.