The Nasdaq Composite has gained 22% year-to-date on the back of surging technology plays.

The Nasdaq’s biotech component is also surging amid vaccine optimism.

Wall Street analysts have identified several Nasdaq-100 stocks with significant upside potential. Combined, they could take the index to new record highs.

The technology sector’s epic bull run of 2020 is set to continue as the Nasdaq’s most prominent players remain insulated from the economic downturn. A surge in volatile biotech plays also gives the tech-heavy index more runway for growth as several companies converge on a new Covid-19 vaccine.

11,000 Nasdaq Becomes Reality

The Nasdaq Composite Index broke above 11,000 last week, marking a new milestone in the ever-resilient bull market. The index has returned 22% year-to-date, including a 62% recovery from the March low. Astonishingly, the Nasdaq has recorded 31 record highs this calendar year.

By comparison, the S&P 500 Index and Dow Jones Industrial Average have yet to return to their pre-crisis highs (although the S&P 500 is close).

The Nasdaq Biotechnology Index is also on a tear as several of its components make headway on a new Covid-19 vaccine. Biotech stocks have recovered more than 45% off their March lows.

On the vaccine front, biotechnology companies have gone from viral genetic sequencing to human studies in less than four months. That transition took 20 months following the SARS outbreak.

More Upside Potential

Despite Big Tech’s frothy valuations, analysts see further upside ahead, especially for companies in the Nasdaq-100. As CNBC reports, Wall Street analysts believe that many Nasdaq-listed stocks can still rise double-digits over the next 12 months.

Cosmetics company Ulta Beauty (NASDAQ:ULTA) has the highest potential upside at just over 30%. Mind you, the stock is down 20% this year.

Semiconductor giant Micron (NASDAQ:MU) comes in second with a potential upside of 27.6%.

Even companies that have outperformed the market, like Moderna (NASDAQ:MRNA), still have significant upside potential, analysts say.

Video: How Moderna became the frontrunner for a Covid-19 vaccine.

Are We in a Bubble?

The stock market’s return to strength has many investors convinced we are in a new stage of the market cycle–and that we are not in a bubble.

Fifty-six percent of investors in a recent DataTrek survey believe current market conditions are not characteristic of a bubble. What’s more, investors continue to favor the Big Tech plays that have made a lop-sided contribution to the market over the past year.

Technology remains the overwhelming favorite because it is mostly insulated from the economic fallout of Covid-19. The software sector has performed exceptionally well as businesses reoriented their workforce to work remotely.

At the same time, mega-cap technology stocks have extremely stretched valuations relative to their long-term moving averages. The phenomenon of ‘narrow market breadth,’ where only a handful of technology stocks drive most of the gains, is also problematic.

Video: Bitcoin bull Mike Novogratz believes tech shares are in a bubble.

The Nasdaq is undoubtedly moving at a record pace. The index just posted its fastest 1,000-point gain since the dot-com bubble.

Perhaps none of this would have been possible without the Federal Reserve, which has fueled the massive stock market recovery via new stages of quantitative easing and a return to zero interest rates.

If the Fed is propping up the stock market, fears of an enormous bubble aren’t entirely unfounded. Given the market’s current momentum, we may be heading a lot higher before the burst.

Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com. Unless otherwise noted, the author holds no investment position in the above-mentioned securities.