It's been a banner year for stocks. The Dow and S&P 500 have been in record territory since March, while the Nasdaq has been trading at its highest levels since 2000.
Though the robust gains have ignited some worries that stocks may be overvalued, most experts believe that a dose of skepticism is actually healthy and predict that stocks will continue to rise next year, albeit at a more modest pace.
Still, the fact that the Nasdaq is back at a level it last traded at during the tech bubble worries some investors. But experts say the Nasdaq is a completely different animal than it was at the start of the millennium.
"The Nasdaq has really grown up over the last decade. It's a lot more mature now," said Kim Forrest, senior equity analyst at Fort Pitt Capital.
For one, the Nasdaq is no longer as tech-heavy as it used to be.
Tech stocks still make up about 42% of the Nasdaq composite, but it was nearly 60% at the height of the tech bubble, according to the Nasdaq OMX (NDAQ). And the exchange has welcomed more companies from the retail sector, health care, and financials. Energy, materials and utility companies, which virtually had no presence on the Nasdaq a decade ago, are also now a small part of the exchange.
"The Nasdaq is definitely not nearly as lopsided as it used to be," said Ryan Detrick, senior technical analyst Schaeffer's Investment Research. "Having more diversification gives the index a whole different feel, and helps its safety factor."
Even the top 100 companies in the Nasdaq are a lot more diverse, said Detrick. He pointed out that one of the companies that is slated to join the Nasdaq-100 (which is the largest non-financial firms trading on the Nasdaq) this week is Tractor Supply Company (TSCO), the country's largest farm and ranch supplies chain.
Overall, the most heavily-weighted companies in the Nasdaq have changed pretty significantly. Apple (AAPL) now makes up nearly 13% of the Nasdaq-100, compared to just 1% at the height of the tech bubble.
Amazon (AMZN), which was publicly traded in 2000, and Google (GOOG), which was around but still private, have become more dominant. Older tech titans like Cisco (CSCO) and Intel (INTC) no longer have as much influence over the index.
Biotechnology companies Gilead Sciences (GILD), Celgene (CELG) and Amgen (AMGN) have also grown more prominent in the Nasdaq as the industry has matured. The biggest biotechs are all profitable companies that now rival Big Pharma firms.
"Biotech companies are now making money, which wasn't so much the case a decade ago," said Detrick. "And with the way the demographics are changing -- aging baby boomers -- biotech will continue to be one of the strongest sectors."
And of course social media companies like Facebook (FB) have added a whole new dynamic to the tech sector in recent years.
Not only have the companies at the top changed, but they're trading at much more reasonable valuations.
Back in early 2000, Cisco traded at levels that were more than 100 times earnings estimates for the coming year. Today, Apple trades at less than 15 times earnings expectations for 2014.
While most experts agree that the Nasdaq overall is not in bubble territory, they warn that some particular sectors may be over-hyped.
"It's pretty clear to me that 3-D printing companies are overvalued," said Forrest.
Forrest said that while people are in love with the idea of being able to design something and print it out, 3-D printers will only really be useful to organizations that design products just before the prototype phase.
"The reality of what these products can do, should do and will do are way different than what people think," said Forrest. "Will we have 3-D printers? Yes. Will they be in everyone's homes? No."
It was a bloody day for technology stocks on Wall Street, as investors punished the entire sector after Google and Microsoft both delivered disappointing earnings results.
Microsoft (MSFT) took the worst beating, plunging more than 11% -- its worst one-day drop since January 2009. The company badly missed Wall Street's profit forecasts after taking a huge write-down on its Surface tablet last quarter.
That bad news as was a hot topic among MOREHibah Yousuf - Jul 19, 2013 4:01 PM ET
Cisco's CEO John Chambers no longer dictates the moves in the broader stock market. Or even just the Nasdaq. Stocks were relatively flat Thursday.
But he still must be smiling. Cisco's (CSCO) stock rallied more than 10% following a blowout quarter.
Chambers told investors that he's encouraged by the "good signs" he sees in the economies of the United States and the rest of the world. Several traders on StockTwits shared MOREMaureen Farrell - May 16, 2013 12:10 PM ET
It's been a rough week for Apple. And it's only Tuesday.
Apple (AAPL) shares slid 1.4% to $431.82 in afternoon trading.
The selling came after Jefferies analyst Peter Misek issued an unflattering report on Apple, adding to a string of negative research published on the company this week.
Misek cut his estimate for iPhone sales, lowered his price target to $420 a share and said there is a 25% chance Apple will miss MOREBen Rooney - Mar 12, 2013 1:25 PM ET
The great rotation in the technology sector continues.
Google (GOOG) shares are trading at record highs above $800, while Apple (AAPL) continues to plumb new lows.
Apple's fall from grace isn't directly related to Google's new-found darling status, but the trend is a significant turnabout.
Once the most valuable company on earth, Apple's stock has fallen 42%, dropping from an all-time trading high of $705 in September to a new 52-week low of $419 on MOREMar 5, 2013 12:48 PM ET
Investors may be worried that certain "old" tech companies have lost their way. But that's clearly not the case with IBM (IBM).
Big Blue reported earnings Tuesday that topped forecasts, news that sent shares up more than 5% Wednesday morning. IBM is now trading just 2.5% below its all-time high ... not bad for a more than 100-year old company.
In fact, IBM was the main reason that the whole market MOREPaul R. La Monica - Jan 23, 2013 12:19 PM ET
Facebook is joining a new social network -- the Nasdaq-100 to be precise.
The California-based social media company will join the elite index on Dec. 12, replacing Infosys, an Indian tech company that is moving its U.S. listing to the New York Stock Exchange.
The move is not exactly a surprise. The Nasdaq-100 includes the 100 largest non-financial securities trading in the market. And with a market capitalization of around $60 billion, Facebook MORECharles Riley - Dec 4, 2012 11:41 PM ET
Amazon.com is in advanced negotiations to buy the mobile chip business of Texas Instruments, according to Israeli newspaper Calcalist, which would put the online retail giant on the path to becoming a manufacturer of smartphone and tablet processors.
Shares of Dallas-based TI (TXN) rose nearly 3% following the report, while shares of Amazon (AMZN) declined slightly.
Amazon's Kindle Fire tablet is currently powered by a TI processing chip, and the company has MOREHibah Yousuf - Oct 15, 2012 12:44 PM ET
Advanced Micro Devices became the latest victim of the sluggish PC market Friday, after the chipmaker warned that third-quarter revenue could decline 10% from the previous quarter.
AMD's shares tumbled 14% following the warning.
The gloomy projection comes as the company faces "weaker than expected demand across all product lines caused by the challenging macroeconomic environment," and is far worse than what the company's management was originally expecting. In July, AMD said it MOREHibah Yousuf - Oct 12, 2012 5:40 PM ET
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.
Happy 14th birthday, Google!
Sure, Google (GOOG) doesn't officially recognize its anniversary until September 27. That's when you'll see the celebratory doodle. But the search engine leader was incorporated on September 4, 1998. So as far as MOREPaul R. La Monica - Sep 4, 2012 1:40 PM ET
|Airlines saved $11 billion on fuel. You saved 8 bucks.|
|Raspberry Pi's $5 computer sold out online in a day|
|Gold price plummets to almost 6-year low|
|Donald Trump's denial challenged by reporter with disability|
|These 6 American stocks can handle the stronger dollar and higher rates|