Over the last three years, the NASDAQ-100 has surged, gaining more than 43% in 2023 and more than 33% in 2024.
The surge has continued throughout 2025, outpacing both the S&P 500 and MSCI World Index as investors pile into AI, cloud, and semiconductor names – driven by their explosive growth and an overall renewed confidence in the digital economy.
But how long can something like this continue? Although the US tech 100 is looking strong and riding high on optimism, there are some who wonder whether valuations have outpaced fundamentals.
The NASDAQ-100 now trades at earnings multiples not seen since 2021, and a handful of mega-cap names – from Nvidia and Microsoft to Amazon and Alphabet – account for more than half of its total weight.
For some investors, that concentration underscores the sector’s strengths, but for others, it’s a warning sign that the rally may be running on borrowed time. So, which is more likely, and what exactly is the outlook for the rest of 2025 and beyond?
A Look at the Drivers
To answer these questions, it’s first important to look at the key drivers behind the NASDAQ-100’s relentless rally. It hasn’t come out of nowhere, of course. Everyone can see that the surge has been powered by the rapid commercialisation of artificial intelligence, as well as a rebound in cloud infrastructure spending, and record demand for advanced semiconductors.
Together, these forces have reignited enthusiasm for technology as the engine of global growth – especially the AI industry, which is expected to reach 3.497 billion by 2033, representing a CAGR of 31.5%.
Indeed, the rise of artificial intelligence alone could be enough to keep tech stocks at the forefront of global markets. What began as a hype cycle around generative AI in 2022 has well and truly matured into a full-scale transformation across multiple industries.
From manufacturing and healthcare to finance and logistics, companies are constantly investing in AI-driven solutions, looking to streamline business processes and – more probably – keep up with the competition.
And this is a good thing for the entire tech landscape, not just the software sector. Because more companies are investing in AI, the broad-based adoption is fueling demand not only for software and data services, but also for the hardware and infrastructure that power them, from high-performance chips to massive cloud networks.
In other words, it’s not just the tech giants themselves that stand to benefit – the ripple effects touch nearly every layer of the technology ecosystem, hence why earnings have been so intense across the NASDAQ-100.
An Ending in Sight?
But is that to say this kind of growth will continue long into the future? In terms of the 2025 outlook, things are still looking good. Whether they’re investing in the US tech 100 or broader technology ETFs, investors are still confident that the momentum will continue, especially since companies across industries are pouring resources into digital transformation.
At the same time, however, it’s important to acknowledge that no rally lasts forever. Market volatility, shifting interest rates, and regulatory pressures could all temper growth. Not to mention the market concentration that has shaken up the NASDAQ-100 in the past.
As we mentioned previously, because a handful of mega-cap tech names now account for a disproportionate share of the index’s performance, any hiccup in earnings or sentiment could ripple across the broader sector.
It’s also important to note that valuations remain elevated compared with historical averages, meaning there’s less room for error if growth expectations aren’t met. Let’s say the next earnings report from a major player like Apple falls short of expectations. Even a modest miss could trigger a sell-off, and because investors might then reassess growth projections for other tech companies, there could be broader market volatility.
But there are always ‘what ifs’ in the world of investment. For now, the outlook remains strong for 2025 and beyond, making tech a continuously compelling sector for investors seeking growth in their portfolio.
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