Despite an ongoing pandemic and the U.S. economy barely limping along, the Nasdaq is trading at all-time highs and is now more than 68% above its March lows. The surge in tech stocks in 2020 has understandably led investors to draw comparisons to the dot-com bubble in 2000.
The Nasdaq ultimately peaked at 5,048.62 on March 10, 2000. Of course, some dot-com bubble stocks have performed much better than others in the 20 years since the bubble burst.
Microsoft’s Past 20 Years: The 2000s began with two major headlines for Microsoft Corporation’s (NASDAQ:MSFT).
First, iconic founder Bill Gates stepped down from the CEO position on Jan. 13, 2000 to become chief software architect for the company. Second, Microsoft was declared an “abusive monopoly” in a court ruling in United States v. Microsoft Corp. on April 3, 2000. At the time, investors feared the Department of Justice would break up the company, but Microsoft ultimately reached a settlement with the DoJ in 2004.
The remainder of the past 20 years was defined mostly by Microsoft’s shift to cloud services and its expansion in the gaming business. The company also acquired the professional social network LinkedIn in 2017.
Dot-Com Bubble Fallout: Microsoft’s high watermark of the dot-com bubble was $119.94 back in 1999 following a two-for-one stock split. When the bubble burst, Microsoft traded all the way back down to $40.25 in late 2000.
Following another two-for-one stock split in 2003, Microsoft shares peaked at $37.50 prior to the 2008 financial crisis, but dropped as low as $14.87 during the crisis sell-off.
Ultimately, it took Microsoft more than 14 years to regain all the value it lost following the bursting of the dot-com bubble, but the stock made it back to new split-adjusted all-time highs by mid-2014. From that point forward, there was no looking back.
Microsoft hit $100 once again by mid-2018 and $200 in June of this year.
Microsoft investors who bought at the dot-com bubble peak had to wait nearly a decade and a half to turn a profit on their initial investments. But those that held on to this day have done just fine.
In fact, $1,000 invested in Microsoft stock at the dot-com bubble peak would be worth about $6,771 today, assuming reinvested dividends.