(This story is for CNBC Pro subscribers only). As mega-cap tech stocks and high-flying names like Tesla struggled Thursday, Wall Street analysts were worrying about a bubble. Tech took a rare breather relative to the rest of the market on Wednesday, with the tech-heavy Nasdaq lagging the Dow Jones Industrial Average and S & P 500 . That weakness continued on Thursday morning, with the Nasdaq and major stocks like Apple falling in early trading. The S & P 500 tech sector is down more than 3%, on pace for worst day since June 11. Still the Nasdaq has gained about 34% this year and has closed above its 200-day moving average for 83 consecutive sessions. That consistent strength, along with volatile spikes in some individual stocks, has drawn comparisons to the infamous tech bubble from two decades ago. "There is an echo of 1999-2000 visible in markets and market behaviour," capital markets firm Berenberg said in a note to clients. The firm pointed to rising retail participation and companies that, like Tesla , are issuing new stock to raise capital while share prices are high, as possible signs of a bubble. Some tech stocks have also been the subject of increased speculation through call options , where data also shows investors betting on increased volatility in the months ahead. Raymond James said in a note that the divergence between large- and small-cap tech could be a sign of "bubbly" activity. "Info tech and communications services were substantial outperformers in the S & P 500, but these sectors meaningfully underperformed in smaller cap indexes. Investors are rushing into large cap tech specifically, not tech broadly," the note said. Barclays similarly said that tech and media stocks look "increasingly bubbly, particularly in the US," but projected stocks to move higher in the months ahead. Strategists at Wall Street firms stressed that there are reasons to think this is not a replay of 1999, including low interest rates that make stocks more attractive. Berenberg said that, based on expected earnings over the next 12 months, the Nasdaq was nearly as expensive as it was during the dot-com bubble, but it was cheap relative to bonds. "The recovery from the March 2020 market lows has also been extraordinary; just not as incredible as the late 1990s," Berenberg said. Credit Suisse's Holt said in a note that outperformance of tech was in part due to the growth and profit potential in the sector. However, the firm released a list of tech stocks that were attractive on both a quality and valuation basis and only Microsoft made the cut among the largest tech stocks. "Despite this track-record, the performance of US Tech has been less and less about fundamentals and increasingly about chasing what's worked well in a low interest rate regime," the note said. The firm said that tech valuations are looking "increasingly extreme" and that the leadership of the largest tech stocks could be a particular concern going forward, as they can only grow so much at their current size. "The law of large numbers suggests that it will be increasingly difficult for mega-cap Tech stocks to find new growth avenues and if indeed they can, to do so without sacrificing profitability," the note said. — CNBC's Christopher Hayes and Michael Bloom contributed to this story.
