- The current stock market bull run could last for another five years, according to tech analyst Gene Munster.
- Munster said new AI companies will go public and drive the stock market boom.
- But Munster expects the stock market rally to turn into a bubble that will eventually burst.
According to Gene Munster, a veteran tech analyst and managing partner at Deepwater Asset Management, the stock market bull market will continue to rise for the next three to five years before ending in a spectacular bubble. It is said that the outlook is promising.
Munster doesn't make this prediction lightly, as he still has bitter memories of his time as a technology analyst during the dot-com boom and bust of the 1990s, but he believes AI technology.
“We are in the early stages of a 3-5 year bull market, which may seem outdated given recent market movements…but ultimately we believe in the essence of AI. If it does, it will beat the hype and then the market will follow,” Munster told CNBC on Friday.
Munster said broad tech trading should continue to help lift the stock market, but investors shouldn't expect most of the gains to be in large-cap tech stocks alone. Instead, Jean believes much of the upside that will inflate the stock market bubble will come from smaller companies focused on AI.
“The substance of the bubble is going to come from another class of tech companies that will push this even higher, and I think some of that will be the IPO class of AI-first companies,” Munster said.
Tech stocks in the Magnificent 7, on the other hand, “should continue to be well-positioned across the board and will benefit, but we're not seeing these two- to three-fold gains there.” said Munster.
Munster's bullishness is based on the idea that AI technology will have twice the impact of the internet.
“For me, the concept of a functioning machine with general intelligence is twice as big as the concept of the Internet,” Munster said. “I think it will ultimately come from smaller mid-caps and some IPOs in five years, what we call the next Mag 7.”
And while Munster sees the stock market rally turning into a bubble and coming to a painful end at the end of the decade, that doesn't mean investors should avoid owning stocks.
“This will end in a spectacular bubble burst, but I think there could be a lot of wealth creation between now and then,” Munster said.
Munster also highlighted that Alphabet and Meta Platforms are unique flagship holdings in Deepwater Asset Management's technology-focused portfolio thanks to their in-house built AI technology.
“These two companies are unique in that the future of AI is not dependent on anyone else,” Munster said. “If you go to Microsoft or Apple, look at what Amazon is doing. They all need third-party models to really enhance their own efforts.”
“So if you really think about who will be the biggest winner in the AI space specifically, I think it's going to end up being Meta and Google.”
