Tech stocks are outperforming their rivals by the most since the dot-com bubble

Tech stocks have soared in 2023, powered higher by expectations of a Fed rate cut and the AI boom.

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• Tech stocks haven't outperformed their rivals this much since the dot-com bubble, according to one measure.
• The tech-heavy Nasdaq Composite beat the Dow Jones Industrial Average by 9.3 percentage points in May.
• That’s the biggest gap between the two indices since October 2001, according to Dow Jones data.

Tech stocks are outperforming broader benchmarks by the largest amount since the dot-com bubble burst in the early 2000s, according to one measure.

The Nasdaq Composite beat the Dow Jones Industrial Average by 9.3 percentage points in May, with the tech-heavy index racking up returns of nearly 8% thanks to Nvidia's stellar gains.

That's the biggest gap between the two stock-market gauges since October 2021, according to Dow Jones data that was cited by MarketWatch.

At that time, the Nasdaq was in the midst of a brief bear-market rally but still trading way below the then-all-time high it had hit in March 2000. 

It would bottom out around a year later having fallen 740% from its peak.

Just as the index's late-1990s boom was fueled by the rise of the internet, an explosion of interest in artificial intelligence has powered techs' early-2023 gains.

Nvidia has emerged as a clear winner from the AI boom, racking up gains of nearly 160% year-to-date, with other mega-cap tech stocks like Meta Platforms and Tesla also surging in 2023.

Read more: Nvidia has AI to thank for entering the $1 trillion club

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