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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 continue debating whether stocks are in an AI bubble, the current bull market has just turned three years old.
October 14, 2022, marked the bottom of the last bear market, which lasted about nine months. By its end the Dow had fallen 20%, the S&P 500 was down 25%, and the NASDAQ had dropped 36%. Since that low, the major indices have risen roughly 60%, 85% and 118%, respectively.
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Get your free 2025 Small-Cap Signals Guide todayBut how much further can stocks run amid historically high valuations, elevated market concentration and surging AI investment? 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 and deliver an average gain of 115%. By comparison, bear markets average a loss of 35% and typically endure less than a year.
There are, of course, anomalies. Before the dot‑com bubble burst, the preceding bull market stretched for 12 years. Conversely, the run that ended with the COVID‑19 shock lasted roughly one year, from March 2009 to March 2020.
Going back to 1928, there have been 27 bull markets. In those cycles, the first half of the bull has outperformed the second half 74% of the time (20 out of 27). So even if this current run isn't ready to yield to a bear market, statistically the pace of gains could slow.
What makes this bull different from many others is that it's been powered by an AI frenzy, which has invited comparisons to the dot‑com era.
A Tale of Two Bubbles
On Dec. 5, 1996, then‑Fed Chairman Alan Greenspan warned of "irrational exuberance." Yet it took more than three years for that bubble to collapse in March 2000. While today's AI‑fueled rally shares some parallels—most notably exuberance—there are important differences.
The companies leading the market's gains today—many of them Magnificent Seven names—aren't speculative startups like those that inflated the dot‑com bubble. These are well‑established mega‑caps with histories of earnings growth and steady revenue.
They are also serial acquirers that fortify competitive moats and fend off emerging rivals through mergers and acquisitions. According to Callie Cox, chief market strategist at Ritholtz Wealth Management, that has helped differentiate this bull from the one that ended with the dot‑com bust.
The current bull market 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 recently 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 eventually rising again. To better understand risks investors may face late in a bull cycle, it helps to look at three AI‑leveraged names and their volatility.
Here's what Tesla (NASDAQ: TSLA), NVIDIA (NASDAQ: NVDA), and Palantir (NASDAQ: PLTR) can tell us about late‑cycle investing.
Clues From 3 High-Volatility Mega-Cap Stocks
As the world's second‑largest EV maker, Tesla may not immediately evoke AI, but the company is integrating the technology into its autonomous‑driving systems and its Optimus humanoid‑robot project.
TSLA is notably 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 recovered about 93%. With a beta of 2.09, Tesla is more than twice as volatile as the market, so bulls should exercise caution if the market broadens weaker.
From its then‑ATH on Nov. 8, 2024, to its YTD low on April 4, 2025, NVIDIA declined 36%. Since that trough it has climbed roughly 93% and set a new ATH earlier in October. The semiconductor giant—arguably the poster child of the AI trade—has a beta of 2.12 and is showing signs of competitive pressure.
Palantir carries the highest beta of the three at 2.60. The AI darling of 2025 has experienced peak‑to‑trough declines of about 10%, 38% and 11% this year while increasingly falling out of favor with some institutional investors.
Given their stretched valuations relative to earnings, those three stocks now trade at forward P/Es of roughly 189.34 (Tesla), 28.03 (NVIDIA) and 215.14 (Palantir), compared with the S&P 500's forward P/E of about 28.
On its third birthday the bull market could still have room to run—bubbles can take time to inflate. That said, investors with outsized positions in the market's most volatile names may want to rebalance with an eye toward protection. Just ask shareholders who owned Yahoo in early 2000.
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