In a recent interview with CNBC, Deepwater Asset Management managing partner Gene Munster expressed optimism about the tech sector’s future, predicting the onset of a robust bull market over the next three to five years. Munster emphasized that the anticipated surge is not merely tied to interest rates but stems from a fundamental shift in productivity, primarily propelled by artificial intelligence (AI). He anticipates that 2024 will mark the inception of a tech bubble that will steadily develop in the coming years, driven by the transformative impact of generative AI technology.
Munster’s viewpoint finds resonance on Wall Street, where other analysts also foresee a prolonged bull market in the tech sector. The driving force behind this momentum is the expected productivity gains resulting from advancements in AI. Goldman Sachs had earlier forecasted a 1.5-percentage-point increase in labor productivity growth over the next decade due to AI. Despite concerns about a potential speculative bubble forming, Munster argues that a tech bubble is an inevitable outcome when faced with a seismic shift like AI. He further predicts a shift in market dynamics, with small-cap tech companies, particularly Russell 2000 growth stocks, outperforming the S&P 500, signaling a departure from the dominance of the Magnificent Seven stocks that characterized 2023. While some strategists caution against the extreme valuations of these seven stocks, Munster believes the market will experience a see-saw effect, with “monster” gains anticipated in other areas.