The tech momentum trade that has driven the stock market higher over the past year and a half is likely to continue for longer than most anticipate, according to WisdomTree economist Jeremy Siegel. In an interview with CNBC, Siegel highlighted the ongoing gains in AI stocks like Nvidia and Broadcom, noting that their strong performance shows no signs of slowing down. “I think that momentum trade on the tech and AI-related is still there. That has been so powerful. It takes a lot of bad news to break a momentum trade and we just haven’t gotten it,” Siegel said. Despite concerns about potential overvaluation, Siegel emphasized that the momentum in these stocks is likely to persist as long as they continue to deliver strong results.
Siegel pointed out that while the S&P 500 is up about 14% year-to-date, the tech-heavy Nasdaq 100 has risen 17%, with Nvidia alone responsible for 35% of the S&P 500’s year-to-date return, surging 162%. He argued that today’s stock market is not in a bubble, as earnings are supporting the high stock prices, unlike the late 1990s internet bubble. Siegel remains optimistic about the stock market’s future, forecasting a 5% after-inflation rate of return over the next three to five years. “My forecast for three to five years on the entire stock market is 5% after inflation rate of returns. That’s after inflation. I think it’s going to be a little bit more,” Siegel said.