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Markets Score 52 Bearish

BofA Warns of Tech Bubble as Nasdaq Volatility Diverges from Historical Norms

Apr 24, 2026 11:41 UTC
NDX
Medium term

Bank of America strategists have flagged a potential bubble in technology megacaps. The warning comes as the Nasdaq 100 exhibits a rare correlation between rising prices and increasing volatility.

  • BofA identifies bubble signals in Nasdaq 100
  • Price and 10-day realized volatility rising simultaneously
  • Deviation from historical trend of volatility subsiding during rallies
  • Comparison drawn to the dot-com bubble era
  • Signal observed in 14 of the last 16 trading days

Bank of America Corp. strategists are sounding alarms over the current rally in technology megacaps, suggesting that the market may be entering bubble territory. The firm identifies a concerning pattern in the Nasdaq 100 Index that mirrors the conditions seen during the dot-com era. Historically, equity markets tend to see a decrease in price swings as shares trend upward. However, current data shows a stark departure from this trend, with the Nasdaq 100 rising in tandem with its 10-day realized volatility measure. According to BofA, this unusual correlation has persisted for 14 of the last 16 trading days. This simultaneous increase in both price and volatility is viewed as a classic signal of speculative overheating. While the rally has been record-breaking, the divergence in volatility suggests that the current ascent may be unstable. Traders and institutional investors are now weighing whether the tech sector's valuation is supported by fundamentals or driven by a speculative frenzy similar to the late 1990s.

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