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The Dot-Com Bubble: What Happened and Why

The Dot-Com Bubble: What Happened and Why

The dot-com bubble (1995-2001): investors confused "the internet is transformative" with "every internet company will profit." NASDAQ fell 78%. Amazon/eBay/Google survived; most didn't.

The dot-com bubble (roughly 1995-2000, burst 2000-2001) was a speculative frenzy around internet companies. The rise: Investors poured money into any company with ".com" in its name, regardless of business viability or profitability. Venture capital flowed freely, IPOs doubled or tripled on day one, and companies with no revenue were valued in billions. The NASDAQ composite rose from ~1,000 in 1995 to over 5,000 in March 2000. Why it seemed rational at the time: The internet genuinely was revolutionary. The mistake wasn't believing the internet would change everything (it did) — it was believing that every internet company would succeed. Investors confused "the internet is transformative" with "this specific website will be profitable." The burst: The NASDAQ crashed from 5,048 in March 2000 to 1,114 by October 2002 — a 78% decline. Companies like Pets.com, Webvan, and Boo.com became symbols of the excess. Trillions in market value evaporated. The survivors: Amazon, eBay, and Google emerged from the wreckage to dominate. The bubble didn't prove the internet was a fad — it proved that most individual internet businesses were bad bets even if the technology itself was sound.

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Finance

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April 04, 2026

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