The Nasdaq-100 Has Gained 20% or More 3 Years Running. This Streak Rests on Far Stronger Earnings Than 1999's.

The Nasdaq-100 has pulled off something it's done just twice before. A 54% jump in 2023 was followed by 25% in 2024 and another 20% last year -- three straight calendar years of 20% or more.

It hasn't slowed down, either. As of this writing, the index has risen around 22% in 2026, after posting a record close earlier this week.

A stretch like that can make investors in the Invesco QQQ Trust (NASDAQ:QQQ), the exchange-traded fund tracking the index, wonder if a steep fall is overdue. History has just two earlier examples, and both ended with a down year of over 30%. But they got there in very different ways, and I think that difference tells investors more than the streak itself.

Five straight years

The first streak started with gains of around 43% in both 1995 and 1996, followed by about 21% in 1997. Three years in, it would've been fair to assume the best was behind it.

Instead, the index jumped around 85% in 1998, then more than doubled in 1999. The QQQ fund itself launched in March 1999, in the middle of that final surge.

Then the run reversed. The Nasdaq-100 dropped three years straight, falling around 37%, 33%, and 38% from 2000 through 2002. That left it about 73% under its closing level for 1999, a level it didn't close above again until March 2014.

The price investors had been paying made the drop far worse. In a November 2025 report comparing today's AI boom to the dot-com era, the index provider's own research team put the Nasdaq-100's price-to-earnings ratio at around 104 at the end of 1999, using total index earnings. Also, 21 of its companies lost money in 1999, according to the same research.

Earnings kept growing during 2022's drop

The second streak was shorter. The Nasdaq-100 rose around 38%, 48%, and 27% from 2019 to 2021, then lost about 33% in 2022 -- the very next year.

That drop had a different cause. The Federal Reserve raised its benchmark interest rate from near zero in early 2022 to a range of 4.25% to 4.5% by December. Investors arguably grew less willing to pay up for growth, and the index's price-to-earnings ratio fell from around 38 at the end of 2021 to about 24 a year later, according to data from Siblis Research.

By my math, the index's earnings climbed about 7% in 2022. So the entire decline came from the valuation shrinking.

The recovery took around two years, not 14. The index closed above its year-end 2021 mark again in December 2023.

Is today's run more like 1999 or 2021?

On valuation, today's Nasdaq-100 is far closer to 2021. Siblis pegs its price-to-earnings ratio at around 34 as of the end of August -- about a third of the 1999 number, and a little lower than at the end of 2021. Of course, it still isn't cheap. Siblis ranks it at the 74th percentile in the index's history since 1995.

Over the 2019-2021 streak, the index gained around 158%, but by my math, its earnings grew only about 41%. A higher valuation did the rest, as the price-to-earnings ratio climbed from about 21 at the end of 2018 to 38 three years later. This time, the index gained around 169% between its 2022 close and the end of August, while earnings grew over 80%.

In other words, earnings are carrying more of this streak than they did in 2019-2021. That's a much sturdier base than 1999, too, when a price-to-earnings ratio over 100 sat on top of thin or missing profits.

But it doesn't rule out a year like 2022. That decline came while earnings were still growing. And at around 34 times earnings, the Nasdaq-100 might see its valuation drop again if interest rates climb or growth cools.

The two earlier streaks also disagree on timing. One lasted for another two years before crashing, and the other ended right away. With 2026's rise at about 22% as I write, this run is within reach of a fourth straight 20% year, something only the 1990s streak did.

In the end, I think this streak rests on stronger earnings than the earlier two, which makes a 2000-style collapse look unlikely to me. With QQQ trading near $748 as I write, I'd consider buying shares bit by bit. I'd just expect a losing year like 2022 somewhere along the way, even if earnings keep growing.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.