Happy Third Birthday to the Bull Market
Written by Jordan Chussler. Published 10/18/2025.
Key Points
- The bull market just turned three years old, and there are rising concerns about historically high valuations and an emerging AI Bubble.
- The average bull market lasts 2.7 years, meaning this current run could be, by historical standards, entering its latter stages.
- Looking at three high-beta tech stocks can provide clues about the risks of unbridled enthusiasm.
As economists and pundits debate whether stocks are in an AI bubble, the current bull market just turned three years old.
October 14, 2022, marked the bottom of the last bear market, which lasted around nine months. By its end, the Dow had dropped 20%, the S&P 500 was 25% lower, and the NASDAQ was down 36%. Since then the major indices have gained roughly 60%, 85%, and 118%, respectively.
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Click here to get the name and ticker before markets openHow much further can investors reasonably expect stocks to run amid historically high valuations, concentrated market leadership, and surging AI investments? Examining past bull-market cycles and the behavior of three high-volatility tech stocks can help provide perspective.
At 3 Years Old, This Bull Market's Long in the Tooth
According to Hartford Funds, bull markets last, on average, 2.7 years with an average gain of 115%. By comparison, bear markets average a loss of 35% and typically last less than a year.
There are, of course, outliers. Before the dot‑com bubble burst, the preceding bull market lasted 12 years. And before COVID‑19 ended the previous cycle, investors enjoyed more than a decade of gains from March 2009 until March 2020.
Going back to 1928, there have been 27 bull markets. In those cycles, the first half has outperformed the second half 74% of the time (20 out of 27). So even if this current run isn't yet ready to yield to a bear market, statistically the rate of gains may be slowing.
What makes this bull market different from many others is that it's being driven by an AI frenzy—drawing frequent comparisons to the dot‑com era.
A Tale of Two Bubbles
On Dec. 5, 1996, then‑Fed Chairman Alan Greenspan warned the market was in a state of "irrational exuberance." Yet it took more than three years for that bubble to burst in March 2000. While today's AI‑fueled rise shows some parallels—chiefly exuberance—there are important differences.
The companies powering the biggest gains today—many of which are Magnificent Seven members—aren't the speculative startups that inflated the dot‑com bubble. These are established mega‑cap firms with track records of earnings growth and steady revenue.
They're also serial acquirers that fortify competitive moats through mergers and acquisitions. According to Callie Cox, chief market strategist at Ritholtz Wealth Management, that has helped distinguish this bull market from the one that ended with the dot‑com collapse.
The current rally has "moved higher on the backs of just a few stocks, with the usual suspects—like small caps—lagging for much of the past few years," Cox wrote in her newsletter. "There's a graveyard of people who have tried to call for the end of this bull, yet it just keeps pushing forward."
Markets are cyclical: what goes up can come down before heading higher again. To better understand what investors may be facing, it's useful to look at three AI‑leveraged stocks and the risk they illustrate.
Here's what Tesla (NASDAQ: TSLA), NVIDIA (NASDAQ: NVDA), and Palantir (NASDAQ: PLTR) can tell us about late‑cycle bull market investing.
Clues From 3 High-Volatility Mega-Cap Stocks
As the world's second‑largest EV maker, Tesla doesn't immediately evoke thoughts of AI. But the company has been embracing AI for autonomous driving systems and the development of its Optimus humanoid robots.
Tesla is also highly volatile. From its all‑time high on Dec. 17, 2024, to its year‑to‑date low on April 8, 2025, the stock fell nearly 54%. From that bottom it has since rebounded about 93%. Its beta of 2.09 means TSLA is more than twice as volatile as the market, so Tesla bulls should be cautious if the broader market turns lower.
From its then‑ATH on Nov. 8, 2024, to a YTD low on April 4, 2025, NVIDIA fell about 36%. Since then it climbed roughly 93% and set a new ATH earlier in October. The semiconductor maker—arguably central to the AI narrative—has a beta of 2.12 and is already showing signs of vulnerability to competitors.
Palantir carries the highest beta of the three at 2.60. The AI darling of 2025 has experienced several sharp swings—peak‑to‑trough declines of roughly 10%, 38%, and 11% this year—while losing favor with some institutional investors.
Given runaway valuations relative to earnings, those three stocks now have forward P/E ratios of about 189.34 (TSLA), 28.03 (NVDA), and 215.14 (PLTR), respectively, compared with the S&P 500's forward P/E of roughly 28.
On its third birthday, this bull market could still have room to run—bubbles often take time to expand before bursting. But investors with large positions in the market's most volatile names should consider rebalancing to manage risk. Just ask shareholders who owned Yahoo in early 2000.
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