NASDAQ 4,000: Why these analysts say we're not in a tech bubble

Nasdaq 4,000: Why these analysts say we're not in a tech bubble

The NASDAQ Composite Index is within striking distance of 4,000. The last time we were at these levels, we all know what happened. So is this time really different?

When it comes to major indices, nothing beats the NASDAQ Composite this year. While the S&P 500 is up 23.5% and the Dow Jones Industrial Average is up 18.8%, the NASDAQ has beaten them both and is up 30.3%. In a little more than four years, the NASDAQ has doubled.

Of course, that's nowhere near its all-time highs. For those who remember the "Dot-Com Bubble", March 10, 2000 was a critical day for the index. That was when it peaked at an intraday high of 5132.52, more 120% higher than where it was a year before.

(Read: Stocks end mixed, S&P 500 sets fresh intraday high)

But, as sure as it soared in 2000, it was collapsed a year later, trading at half that value. Two years after the peak, the NASDAQ was roughly a quarter of its highs.

"This time is different" was the refrain heard on the way up at the end of the last millennium. But, is this time really different?

The top five companies in the index, weighing in at 22.67% combined, are Apple, Microsoft, Google, Amazon, andCisco. While Apple is just about flat for the year, the others are up significantly. Cisco is up nearly 13% while Microsoft is up 36% and Google and Amazon are both up in the 40% range.

But, on a valuation basis, things are a far cry from the wild days of 2000. Apple, Amazon, and Microsoft trade with forward price-to-earnings ratios of around 12. Meanwhile, Cisco is at 10 and Google at 19.

"A lot of those [companies] didn't have earnings at the time," says CNBC contributor Zachary Karabell, president of River Twice Research, in reference to the tech companies that drove the NASDAQ in 1999. "They were priced to expectations multiples. Let's be clear: From March 2000 to today, the NASDAQ is still down 24% - 25%. For all this talk of a frothy market, we are nowhere near that. The multiple has shrunk immeasurably and it should have shrunk immeasurably from 1999."

(Watch: Apple earnings: It's all about iPhone sales)

Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson believes there's a pattern of high growth starting in the last quarter of the year.

"We are entering a period of extremely strong seasonality with a nice tailwind of momentum behind us," says Ross. "By seasonality, I mean the three month season that begins in November and runs through January is the strongest three month period of the year dating back to 1971. The average gain is 6.4%, so that's very powerful bullish seasonality."

That's not to say one should always expect a bull market this time of year. One example Ross notes is November 2000. "NASDAQ experienced its worse monthly decline ever, falling 23% in just the month of November [2000] alone," say Ross.

Nonetheless, he also sees a difference from the bubble of 1999 and believes there may be significant upside ahead. But, he says so with caution.

"Just because this isn't the same type of bubble we saw in '99, [that] doesn't mean there's not froth here, doesn't mean stocks can't be overvalued, and doesn't mean they can't drop a lot," says Ross.

To see the rest of Karabell's fundamental analysis and to see where Ross sees the NASDAQ chart headed next, watch the video above.

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