Party Like It's 1998?
Following Netscape’s 1994 debut, optimism around the Internet helped drive years of strong U.S. stock market returns. Has ChatGPT sparked a similar trajectory—and if history rhymes, what could that mean for investors going forward?
Driven by enthusiasm for the Internet, the U.S. stock market produced strong returns for many years following the introduction of Netscape in 1994. Did the release of ChatGPT set equities on a similar path and, if history does rhyme, what may that imply about future returns?
- After its introduction on December 15, 1994, Netscape became the first widely used graphical web browser, revolutionizing internet access and inspiring investors with the potential of the World Wide Web. In the three years following its launch, the Nasdaq Composite soared by 112%.1
- While Alger had been researching and writing about AI for years, it wasn’t until OpenAI launched ChatGPT on November 30, 2022, that the world was able to interact broadly with a large language model. Within just five days, ChatGPT reached one million users, igniting investor excitement about the transformative potential of generative AI. In the three years since its introduction, the Nasdaq Composite had surged almost exactly as much as it had following Netscape: 113%.2
- If the introduction of ChatGPT is analogous to Netscape, that would put us in early 1998—a year when the Nasdaq surged 40%. Notably, the Internet was still so nascent that many of the major technology giants responsible for much of the shareholder value creation tied to the web had not yet been founded: Google (1998), PayPal (1998), Salesforce (1999), Facebook (2004), Uber (2009), Instagram (2010). Will the Nasdaq rise over 220% in the next 2–3 years as it did from the end of 1997 to its peak in March 2000? While the outcome is uncertain, it is possible that many of AI’s future value creators have yet to be introduced to the world, presenting compelling opportunities for growth equity investors, in our view.
1Nasdaq & FactSet. Nasdaq Composite total return from 12/15/1994 through 12/31/1997. Past performance is not indicative of future performance.
2Nasdaq & FactSet. Nasdaq Composite total return from 11/30/2022 through 12/31/2025. Past performance is not indicative of future performance.
The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of January 2026. These views are subject to change at any time and may not represent the views of all portfolio management teams. These views should not be interpreted as a guarantee of the future performance of the markets, any security or any funds managed by FAM. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.
Risk Disclosures: Investing in the stock market involves risks, including the potential loss of principal. Growth stocks may be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. Past performance is not indicative of future performance. Investors whose reference currency differs from that in which the underlying assets are invested may be subject to exchange rate movements that alter the value of their investments. Companies involved in, or exposed to, AI-related businesses may have limited product lines, markets, financial resources or personnel as they face intense competition and potentially rapid product obsolescence, and many depend significantly on retaining and growing their consumer base. These companies may be substantially exposed to the market and business risks of other industries or sectors, and may be adversely affected by negative developments impacting those companies, industries or sectors, as well as by loss or impairment of intellectual property rights or misappropriation of their technology. Companies that utilize AI could face reputational harm, competitive harm, and legal liability, and/or an adverse effect on business operations as content, analyses, or recommendations that AI applications produce may be deficient, inaccurate, biased, misleading or incomplete, may lead to errors, and may be used in negligent or criminal ways. AI technology could face increasing regulatory scrutiny in the future, which may limit the development of this technology and impede the future growth. AI companies, especially smaller companies, tend to be more volatile than companies that do not rely heavily on technology.
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The following positions represent firm wide assets under management as of October 31, 2025: OpenAI, 0.0%, Alphabet Inc., 3.3%, PayPal Holdings, Inc., 0.0%, Salesforce, Inc., 0.0%, Meta Platforms Inc Class A, 4.4%, Uber Technologies, Inc., 0.0%,
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